Unassociated Document
SUBJECT
TO COMPLETION, DATED JULY 17, 2006
Prospectus
Supplement
July
, 2006
(To
Prospectus dated July 24, 2003)
$250,000,000
ENERGY
EAST CORPORATION
%
Notes due 2036
The
Notes
will bear interest at the rate of % per year and mature
on , 2036. Interest will be payable semi-annually in arrears
on January and July , beginning
on January , 2007. We may redeem the Notes, at our
option, at any time in whole or from time to time in part, at the redemption
price described in this prospectus supplement under the heading "Description
of
the Notes - Optional Redemption."
The
Notes
will be our unsecured and unsubordinated obligations and will rank equally
with
our other unsecured and unsubordinated indebtedness from time to time
outstanding.
We
do not
intend to list the Notes on any national securities exchange.
Investing
in the Notes involves risks. See "Risk Factors" on page S-3 of this prospectus
supplement.
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Per
Note
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Total
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Public
offering price(1) %
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%
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$ |
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Underwriting
discount%
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% |
$ |
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Proceeds,
before expenses, to Energy East(1) .%
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% |
$ |
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__________________
(1)
Plus
accrued interest, if any, from July ,
2006 if
settlement occurs after that date.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The
underwriters expect to deliver the Notes in book-entry form only through the
facilities of The Depository Trust Company on or about
July , 2006.
Joint
Book-Running Managers
Banc
of America Securities LLC
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Wachovia
Securities
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Co-Managers
The
information in this preliminary prospectus supplement is not complete and
may be
changed. This preliminary prospectus supplement and the accompanying prospectus
are not an offer to sell these securities and are not an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
TABLE
OF CONTENTS
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Page
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Prospectus
Supplement
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Risk
Factors
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S-3
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Our
Company
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S-3
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Recent
Developments
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S-4
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Selected
Financial Data
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S-6
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Capitalization
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S-6
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Ratio
of Earnings to Fixed Charges
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S-7
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Use
of Proceeds
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S-7
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Description
of the Notes
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S-8
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Underwriting
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S-12
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Legal
Matters
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S-13
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Experts
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S-13
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Incorporation
of Certain Documents by Reference
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S-13
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Prospectus
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About
This Prospectus
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3
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Where
You Can Find More Information
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3
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Cautionary
Statement Regarding Forward-Looking Statements
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5
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Energy
East Corporation
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6
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Recent
Developments
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7
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The
Trust
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8
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Use
of Proceeds
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8
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Ratio
of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges
and
Preferred Stock Dividends
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9
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Description
of Securities
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10
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Plan
of Distribution
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46
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Experts
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47
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Legal
Matters
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47
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This
prospectus supplement contains information about Energy East Corporation and
the
terms of the Notes. This prospectus supplement, or the information incorporated
by reference in this prospectus supplement, may add to, update or change
information in the accompanying prospectus. If information in this prospectus
supplement or in the information incorporated by reference is inconsistent
with
the accompanying prospectus, this prospectus supplement, or the information
incorporated by reference, will apply and will supersede that information in
the
accompanying prospectus.
You
should rely only on the information contained in or incorporated by reference
in
this prospectus supplement and the accompanying prospectus. We have not, and
the
underwriters have not, authorized anyone to provide you with different or
additional information. We are not making an offer of the Notes in any
jurisdiction where the offer is not permitted. You should not assume that the
information provided by this prospectus supplement or the accompanying
prospectus is accurate as of any date other than the date of such
documents.
In
this
prospectus supplement, references to "we," "us" and "our" refer to Energy East
Corporation, unless the context indicates that "we," "us" or "our" refers to
Energy East Corporation together with its consolidated
subsidiaries.
RISK
FACTORS
Investing
in the Notes involves risk. Please see the risk factors in our Annual Report
on
Form 10-K for the fiscal year ended December 31, 2005, which is incorporated
by
reference in this prospectus supplement and the accompanying prospectus. Before
making an investment decision, you should carefully consider these risks as
well
as other information contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus.
OUR
COMPANY
We
are a
New York public utility holding company organized in 1997. We are a
super-regional energy services and delivery company with operations in New
York,
Connecticut, Massachusetts, Maine and New Hampshire and corporate offices in
New
York and Maine. We became the parent company of New York State Electric &
Gas Corporation ("NYSEG") in May 1998, Connecticut Energy Corporation in
February 2000, CMP Group, Inc., CTG Resources, Inc. and Berkshire Energy
Resources in September 2000 and RGS Energy Group, Inc. in June 2002. Connecticut
Energy, CMP Group, CTG Resources, Berkshire Energy and RGS Energy are
wholly-owned Energy East subsidiaries.
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·
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Connecticut
Energy’s wholly-owned subsidiary, The Southern Connecticut Gas Company,
is
a regulated utility primarily engaged in the retail distribution
of
natural gas in Connecticut.
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·
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CMP
Group’s wholly-owned subsidiary, Central Maine Power Company, is a
regulated utility primarily engaged in transmitting and distributing
electricity generated by others to retail customers in Maine. Central
Maine Power Company sold its generation assets in
1999.
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·
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CTG
Resources’ wholly-owned subsidiary, Connecticut Natural Gas Corporation,
is a regulated utility primarily engaged in the retail distribution
of
natural gas in Connecticut.
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·
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Berkshire
Energy’s wholly-owned subsidiary, The Berkshire Gas Company, is a
regulated utility primarily engaged in the distribution of natural
gas in
western Massachusetts.
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·
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RGS
Energy’s wholly-owned subsidiaries are NYSEG and Rochester Gas and
Electric Corporation ("RG&E"). NYSEG is a regulated utility primarily
engaged in purchasing and delivering electricity and natural gas
in the
central, eastern and western parts of the state of New York. NYSEG
sold a
majority of its generation assets in 1999 and the bulk of the remaining
generation assets in 2002. RG&E is a regulated utility primarily
engaged in generating, purchasing and delivering electricity and
purchasing and delivering natural gas in an area centered around
the city
of Rochester, New York. RG&E sold its largest generation station, the
Robert E. Ginna Nuclear Power Plant, in 2004, and plans to shut down
its
largest remaining generating facility, Russell Station, in 2007 upon
the
completion of a transmission upgrade required to assure reliable
delivery.
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Our
energy delivery business consists primarily of our regulated electricity
transmission and distribution operations in upstate New York and Maine and
our
regulated natural gas transportation, storage and distribution operations in
upstate New York, Connecticut, Maine and Massachusetts. We serve approximately
two million electricity customers and one million natural gas customers. Our
service territories reflect diversified economies, including high-technology
firms, insurance, light industry, consumer goods manufacturing, pulp and paper,
ship building, colleges and universities, agriculture, fishing and recreational
facilities. No customer accounts for 5% or more of either electric or natural
gas revenues.
Our
address is 52 Farm View Drive, New Gloucester, Maine 04260-5116 and our
telephone number is (207) 688-6300.
RECENT
DEVELOPMENTS
NYSEG's
Electric Rate Plan Extension Proceeding
In
September 2005 NYSEG filed a six-year Electric Rate Plan Extension with the
New
York State Public Service Commission ("NYPSC"), to commence on January 1, 2007,
which is the day after the end of its current rate plan. As part of its filing,
NYSEG proposed to decrease customers' bills prior to the commencement of the
rate plan extension by implementing a customer bill credit effective for the
four-month period from September 1, 2006, through December 31, 2006. In
particular, NYSEG proposed to return to its electric customers $24 million
from
its Asset Sale Gain Account ("ASGA"), initially created as a result of the
sale
of NYSEG's generating stations. The ASGA has been enhanced during NYSEG's
current rate plan with its customers' share of earnings resulting from the
earnings sharing mechanism. NYSEG's Electric Rate Plan Extension, as
subsequently amended, also proposed, beginning on January 1, 2007, to reduce
its
nonbypassable wires charge by $168 million and increase delivery rates by $104
million, thereby maintaining an annualized overall electricity delivery rate
decrease of approximately $64 million, or 8.6%. NYSEG proposed to accomplish
the
reduction in its nonbypassable wires charge, which would more than offset the
increase in delivery rates, by accelerating benefits from certain expiring
above-market Non-Utility Generator ("NUG") contracts and capping the amount
of
above-market NUG costs over the term of the rate plan extension (referred to
as
NYSEG's NUG levelization proposal). NYSEG also proposed to increase its equity
ratio from 45% to 50%. In addition, NYSEG's proposal would allow customers
to
continue to benefit from merger synergies and savings.
In
early
February 2006 Staff of the NYPSC ("Staff")
and six
other parties submitted their direct cases. Staff presented only a one-year
rate
case. In its presentation, Staff proposed a delivery rate decrease of
approximately $83 million, or about 13.4%, which would equate to an overall
delivery rate decrease of approximately $226 million, or about 36.5%, including
NYSEG's proposed nonbypassable wires charge reduction for the 2007 rate year.
Staff neither rebutted nor addressed NYSEG's revised and updated rate plan
extension proposal, including its NUG levelization proposal. Staff also opposed
NYSEG's proposal to extend its Voice Your Choice program. Staff has also raised
several retroactive accounting issues which, if accepted by the NYPSC, could
have a material effect on 2006 earnings.
NYSEG
filed its rebuttal case on February 21, 2006, responding to Staff's one-year
rate case proposal by proposing to increase delivery rates by approximately
$58
million, beginning on January 1, 2007. NYSEG also proposed to amortize an
equivalent portion of the ASGA liability through a customer bill credit in
the
nonbypassable wires charge to offset the delivery increase, resulting in no
delivery rate change for 2007.
Hearings
in this proceeding concluded on April 21, 2006, and various parties filed briefs
on April 26, 2006.
On
June
9, 2006, the administrative law judges assigned to NYSEG's electric rate plan
extension proceeding issued their Recommended Decision ("RD").
The
RD,
among other things, recommends:
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•
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A
decrease in delivery rates of $37 million. NYSEG’s most recent update in
the proceeding requested a $58 million increase in delivery
rates.
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•
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A
9.3% return on common equity ("ROE"). NYSEG had requested an 11%
ROE.
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•
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A
significant modification to NYSEG’s commodity options program,
including:
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o
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Use
of the variable rate supply option as the default for all customers
not
making a supply election, as opposed to the current fixed price option
default.
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o
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A
reduction in the allowance, from 35% to 22%, used to set the supply
rate
to cover the costs of providing fixed price electricity at
retail.
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o
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The
use of an earnings collar for supply of plus/minus $5 million with
80/20
(customers/shareholders) sharing outside the collar. NYSEG currently
can
earn 300 basis points ROE on supply (approximately $21 million) after
which earnings are shared 50/50.
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NYSEG
believes that the commodity options program, as recommended, is unworkable
and
inconsistent with the development of a competitive retail market for supply.
In
particular, the lower allowance used to set the supply rate does not cover
the
cost and risk of providing fixed price electricity at retail and would stifle
participation by retail energy service providers. If the commodity portion
of
the RD were adopted as proposed, NYSEG could not offer fixed price electricity
to its customers.
If
the RD
were adopted in its entirety by NYPSC, the RD would have a significant adverse
impact on NYSEG's financial condition and results of operations. In addition
to
the items noted above, the RD ignores over $25 million of forecasted expenses,
which, if adopted, would force NYSEG to cut operating, maintenance and capital
spending plans, resulting in significant workforce reductions and degradation
in current levels of customer service. It is also likely that NYSEG would
be forced to file a new electric rate case.
NYSEG
filed briefs excepting certain aspects of the RD on June 29, 2006. Further,
NYSEG continues to support the adoption of a six-year rate plan extension,
including its NUG levelization proposal to moderate the delivery rate increase,
and its proposal to extend its Voice Your Choice program. A final NYPSC decision
is expected in August 2006.
Amendments
relating to Anti-Takeover Effects of Charter and By-Laws and Certain Provisions
of Law
In
order
to promote stockholder democracy, our Restated Certificate of Incorporation,
as
amended (the "Charter") and By-Laws were amended in 2006 to eliminate provisions
requiring the vote of two-thirds of the outstanding shares of common stock
to
amend our By-Laws that address advance notice of director nominations, advance
notice of business matters to be presented at the annual stockholder meeting,
special meetings of stockholders and Board composition/director removal. In
addition, the Charter was amended in 2006 to replace statutory super majority
shareholder voting provisions with a majority voting standard with respect
to
sales of all or substantially all of our assets, share exchanges and
dissolution.
SELECTED
FINANCIAL DATA
The
following material is qualified by, and should be considered in conjunction
with, the more detailed information appearing in the accompanying prospectus
and
the documents incorporated by reference in this prospectus supplement and the
accompanying prospectus. In our opinion, all adjustments (constituting only
normal recurring adjustments) necessary for a fair statement of the results
of
operations for the three months ended March 31, 2006 and 2005, have been
made.
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Three
Months Ended March 31,(1)
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Year
Ended December 31,
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2006
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2005
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2005
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2004
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2003
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2002(2)
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2001
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(Thousands,
except per share amounts)
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Operating
Revenues
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$
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1,696,554
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$
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1,637,278
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$
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5,298,543
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$
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4,756,692
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$
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4,514,490
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$
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3,778,026
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$
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3,681,613
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Net
Income
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$
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133,241
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$
|
154,366
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$
|
256,833
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$
|
229,337
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$
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210,446
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$
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188,603
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(3)
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$
|
187,607
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(4)(5)
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Earnings
Per Share, basic
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$
|
.91
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$
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1.05
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$
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1.75
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$
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1.57
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$
|
1.45
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$
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1.44
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(3)
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$
|
1.61
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(4)
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Earnings
Per Share, diluted
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$
|
.90
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$
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1.05
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$
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1.74
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$
|
1.56
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|
$
|
1.44
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|
$
|
1.44
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(3)
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$
|
1.61
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(4)
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Dividends
Per Share
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$
|
.29
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$
|
.275
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$
|
1.115
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|
$
|
1.055
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|
$
|
1.00
|
|
$
|
.96
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|
$
|
.92
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Total
Assets
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$
|
11,126,936
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|
$
|
10,884,205
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|
$
|
11,487,708
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|
$
|
10,796,622
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|
$
|
11,330,441
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$
|
10,944,347
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$
|
7,269,232
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(6)
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Long-term
Obligations,
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|
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Capital
Leases and
|
|
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|
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Redeemable
Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Stock
(7)
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|
$
|
3,706,279
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|
$
|
3,771,462
|
|
$
|
3,667,065
|
|
$
|
3,797,685
|
|
$
|
4,017,846
|
|
$
|
3,721,959
|
|
$
|
2,816,278
|
|
_______________________
(1)
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Due
to the seasonal nature of our operations, financial results for interim
periods are not necessarily indicative of trends for a 12-month
period.
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(2)
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Due
to the completion of our merger transaction with RGS Energy during
2002,
the consolidated financial statements include RGS Energy’s results
beginning with July 2002.
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(3)
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Includes
the writedown of an investment in NEON Communications, Inc. that
decreased
net income $7 million and earnings per share 6 cents and the effect
of
restructuring expenses that decreased net income $24 million and
earnings
per share 19 cents.
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(4)
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Includes
the writedown of an investment in NEON Communications, Inc. that
decreased
net income $46 million and earnings per share 39
cents.
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(5)
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Includes
goodwill amortization of $25
million.
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(6)
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Does
not reflect the reclassification of accrued removal costs from accumulated
depreciation to a regulatory
liability.
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(7)
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Not
including current maturities.
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CAPITALIZATION
The
following table sets forth our historical capitalization as of March 31, 2006,
and our capitalization as adjusted to reflect the issuance and sale of $250
million aggregate principal amount of the Notes contemplated by this prospectus
supplement and our application of the net proceeds in the manner described
under
"Use
of
Proceeds."
You
should read this table in conjunction with our consolidated financial statements
and related notes incorporated by reference in this prospectus supplement and
the accompanying prospectus.
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As
of March 31, 2006
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As
Adjusted
|
|
|
|
(Thousands)
|
|
(Thousands)
|
|
Notes
Payable
|
|
$
|
19,000
|
|
|
|
|
$
|
114,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Long-term
Debt (includes current maturities)
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$
|
3,637,177
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52.8
|
%
|
$
|
3,887,177
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|
|
57.3
|
%
|
Debt
Owed to Subsidiary Holding Solely Parent Debentures
|
|
|
355,670
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|
|
5.1
|
|
|
--
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|
|
--
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Preferred
Stock of Subsidiaries
|
|
|
24,631
|
|
|
0.4
|
|
|
24,631
|
|
|
0.4
|
|
Common
Stock Equity
|
|
|
2,871,257
|
|
|
41.7
|
|
|
2,864,657
|
|
|
42.3
|
|
Total
Capitalization (includes current maturities)
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|
$
|
6,888,735
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|
|
100.0
|
%
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$
|
6,776,465
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100.0
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%
|
RATIO
OF EARNINGS TO FIXED CHARGES
The
following table sets forth our consolidated ratio of earnings to fixed charges
for the periods indicated.
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|
|
Year
Ended December 31,
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|
|
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Three
Months Ended March 31, 2006(1)
|
|
2005
|
|
2004
|
|
2003
|
|
2002(2)
|
|
2001
|
|
Ratio
of Earnings to Fixed Charges
(3)
|
|
|
3.75
|
|
|
2.43
|
|
|
2.69
|
|
|
2.08
|
|
|
1.98
|
(4)
|
|
2.44
|
(4)
|
__________________________
(1)
|
Due
to the seasonal nature of our operations, financial results for interim
periods are not necessarily indicative of trends for a 12-month
period.
|
(2)
|
Due
to the completion of our merger transaction with RGS Energy during
2002,
the consolidated financial statements include RGS Energy’s results
beginning with July 2002.
|
(3)
|
The
ratio of earnings to fixed charges is calculated by dividing earnings
by
fixed charges. For this purpose earnings means income from continuing
operations before income taxes and fixed charges. Fixed charges means
all
interest charges, the interest component of rentals and preferred
stock
dividends of subsidiaries.
|
(4)
|
The
ratio of earnings to fixed charges in 2002 includes a $12 million
writedown of an investment in NEON Communications and a $41 million
effect from restructuring expenses. Excluding those two amounts,
the ratio
of earnings to fixed charges for 2002 would have been 2.15. The ratio
of
earnings to fixed charges in 2001 includes a $78 million writedown of
an investment in NEON Communications. Excluding the $78 million, the
ratio of earnings to fixed charges for 2001 would have been 2.77.
We
provide information on our ratio of earnings to fixed charges exclusive
of
nonrecurring items because we believe this information may be helpful
to
investors in assessing our ratio of earnings to fixed charges from
ongoing
operations. We caution investors that our view of nonrecurring items
may
differ from that of other companies and our ratio of earnings to
fixed
charges exclusive of nonrecurring items should not be used as a surrogate
for our reported ratio of earnings to fixed charges prepared in accordance
with generally accepted accounting
principles.
|
USE
OF PROCEEDS
We
intend
to use the net proceeds from the sale of the Notes as well as additional
short-term borrowings to help facilitate the redemption of $345 million
aggregate principal amount of our 8¼% junior subordinated debt securities held
by one of our financing subsidiaries, Energy East Capital Trust I. Energy East
Capital Trust I will simultaneously redeem at par its publicly held 8¼% Capital
Securities. We expect to write off approximately $11 million of unamortized
debt
expense, approximately $6.6 million after tax, when these securities are
redeemed. In addition, we may use a portion of the proceeds for general
corporate purposes. We will invest funds not immediately required for such
purposes in short-term investment grade securities.
DESCRIPTION
OF THE NOTES
The
following description of the particular terms of the Notes, which are referred
to in the accompanying prospectus as "senior debt securities," is not complete
and should be read together with "Description of Securities—Senior
Debt Securities" in the accompanying prospectus. This description supplements
and, to the extent it is inconsistent with the description in the accompanying
prospectus, replaces the description of the general terms and provisions of
the
debt securities in the accompanying prospectus. The Notes will be issued under
an existing senior indenture dated as of August 31, 2000, between us and
JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank), as
supplemented by eight supplemental indentures. References in this prospectus
supplement to the senior indenture will mean the senior indenture as so
supplemented. This summary is qualified in its entirety by reference to the
senior indenture.
General
The
Notes
will mature on July , 2036. The Notes will bear interest from
July , 2006, at the rate of % per year.
Interest will be payable semi-annually in arrears on January
and July of each year, beginning January ,
2007, to the persons in whose names the Notes are registered at the close of
business on the preceding January and July ,
respectively (whether or not a Business Day), subject to certain exceptions.
Interest on the Notes will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
The
Notes
will be our unsecured and unsubordinated obligations ranking equally with our
other existing and future unsecured and unsubordinated indebtedness. At March
31, 2006, we had $1,032,350,000 outstanding of indebtedness consisting of
$200,000,000 8.05% Notes due November 15, 2010, $232,350,000 5.75% Notes due
November 15, 2006, $400,000,000 6.75% Notes due June 15, 2012 and $200,000,000
6.75% Notes due September 15, 2033, exclusive of $345,000,000 of indebtedness
issued to Energy East Capital Trust I, a business trust, in connection with
the
issuance of 8¼% Capital Securities by Energy East Capital Trust I. All this
indebtedness is unsecured and unsubordinated. In addition, at March 31, 2006,
our subsidiaries had aggregate indebtedness outstanding of approximately
$2,607,065,000 (including current maturities). The Notes issued hereby will
be
effectively subordinated to the indebtedness of our subsidiaries. The senior
indenture contains no restrictions on the amount of additional indebtedness
that
we may issue.
We
may,
without the consent of the holders of the Notes, issue additional notes having
the same ranking and the same interest rate, maturity and other terms as the
Notes. Any additional notes will, together with the Notes, constitute a single
series of the notes under the senior indenture. No additional notes may be
issued if an event of default has occurred with respect to the
Notes.
The
Notes
will initially be issued only in registered, book-entry form, in denominations
of $1,000 and any integral multiples of $1,000 as described under "—Book-Entry
Only Issuance - The Depository Trust Company" below. We will issue global
securities in denominations that together equal the total principal amount
of
the outstanding Notes.
Optional Redemption
The
Notes
will be redeemable, at our option, at any time in whole or from time to time
in
part, at a redemption price equal to the greater of:
|
· |
100%
of the principal amount of the Notes to be redeemed,
or
|
|
· |
the
sum of the present values of the remaining scheduled payments of
principal
and interest thereon from the redemption date to the maturity date
computed by discounting such payments to the redemption date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at a rate equal to the sum of (1) basis points plus (2) the
Adjusted Treasury Rate on the third Business Day prior to the redemption
date, as calculated by an Independent Investment
Banker,
|
plus,
in
each case, accrued and unpaid interest, if any, to the redemption
date.
"Adjusted
Treasury Rate" means, with respect to any redemption date:
|
· |
the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which
is
published weekly by the Board of Governors of the Federal Reserve
System
and which establishes yields on actively traded U.S. Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the
Remaining
Life, yields for the two published maturities most closely corresponding
to the Comparable Treasury Issue will be determined and the Adjusted
Treasury Rate will be interpolated or extrapolated from such yields
on a
straight line basis, rounding to the nearest month);
or
|
|
· |
if
such release (or any successor release) is not published during the
week
preceding the calculation date or does not contain such yields, the
rate
per annum equal to the semi-annual equivalent yield to maturity of
the
Comparable Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount)
equal
to the Comparable Treasury Price for such redemption
date.
|
"Business
Day" means any day other than a Saturday or Sunday or a day on which banking
institutions in New York City are authorized or obligated by law or executive
order to close.
"Comparable
Treasury Issue" means the U.S. Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the remaining term of
the
Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of such Notes
("Remaining Life") or, if, in the reasonable judgment of the Independent
Investment Banker, there is no such security, then the Comparable Treasury
Issue
will mean the U.S. Treasury security or securities selected by an Independent
Investment Banker as having an actual or interpolated maturity or maturities
comparable to the remaining term of the Notes.
"Comparable
Treasury Price" means (1) the average of the Reference Treasury Dealer
Quotations for the applicable redemption date, after excluding the highest
and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Independent
Investment Banker" means one of the Reference Treasury Dealers selected by
us,
or if any such firm is unwilling or unable to serve as such, an independent
investment and banking institution of national standing appointed by
us.
"Reference
Treasury Dealer" means each of (1) Banc of America Securities LLC and one other
primary U.S. Government securities dealer ("Primary Treasury Dealer") selected
by Wachovia Capital Markets, LLC and their respective successors; provided
that
if any of the foregoing ceases to be, and has no affiliate that is, a Primary
Treasury Dealer, we will substitute for it another Primary Treasury Dealer
and
(2) any two other Primary Treasury Dealers selected by us.
"Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date for the Notes, the average, as determined by
the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker at 5:00 p.m., New York
City time, on the third Business Day preceding such redemption
date.
We
will
mail notice of redemption at least 30 days but not more than 60 days before
the
applicable redemption date to each holder of the Notes to be redeemed. If we
elect to partially redeem the Notes, the Trustee will select in a fair and
appropriate manner the Notes to be redeemed.
Upon
the
payment of the redemption price, plus accrued and unpaid interest, if any,
to
the date of redemption, interest will cease to accrue on and after the
applicable redemption date on the Notes or portions thereof called for
redemption.
Book-Entry
Only Issuance - The Depository Trust Company
Upon
issuance, all book-entry Notes will be represented by one or more fully
registered global certificates. Each global security will be deposited with
DTC
or its custodian and will be registered in the name of DTC or a nominee of
DTC.
DTC will thus be the only registered holder of these securities.
The
following is based on information furnished to us by DTC that we believe to
be
reliable, but we accept no responsibility for its accuracy:
DTC,
the
world's largest securities depository, 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 Securities Exchange Act of 1934. DTC holds and provides asset
servicing for over 2.6 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments from over
100
countries that DTC's participants ("Direct Participants") deposit with DTC.
DTC
also facilitates the post-trade settlement among Direct Participants of sales
and other securities transactions in deposited securities, through electronic
computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations.
DTC
is a
wholly-owned subsidiary of The Depository Trust & Clearing Corporation
("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC
and
members of the National Securities Clearing Corporation and Fixed Income
Clearing Corporation (NSCC and FICC, also subsidiaries of DTCC). Access to
the
DTC system is also available to others such as both U.S. and non-U.S. securities
brokers and dealers, banks, trust companies and clearing corporations that
clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's
highest ranking: AAA. The DTC Rules applicable to DTC and its Participants
are
on file with the Securities and Exchange Commission. More information about
DTC
can be found at www.dtcc.com
and
www.dtc.org.
Purchases
of securities under the DTC system must be made by or through Direct
Participants, which will receive a credit for the securities on DTC’s records.
The ownership interest of each actual purchaser of each Security ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants'
records. Beneficial Owners will not receive written confirmation from DTC of
their purchase. Beneficial Owners are, however, expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the securities are to be accomplished by entries made on the books
of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in securities, except in the event that use of the book-entry system
for the securities is discontinued.
To
facilitate subsequent transfers, all securities deposited by Direct Participants
with DTC are registered in the name of DTC’s partnership nominee, Cede &
Co., or such other name as may be requested by an authorized representative
of
DTC. The deposit of securities with DTC and their registration in the name
of
Cede & Co. or such other nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
securities. DTC’s records reflect only the identity of the Direct Participants
to whose accounts the securities are credited, which may or may not be the
Beneficial Owners. The Direct and Indirect Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance
of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Although
voting with respect to the Notes is limited, in those cases where a vote is
required, neither DTC nor Cede & Co. (nor any other DTC nominee) will
consent or vote with respect to the Notes unless authorized by a Direct
Participant in accordance with DTC's Procedures. Under its usual procedures,
DTC
mails an Omnibus Proxy to us as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Notes are credited on the record
date
(identified in a listing attached to the Omnibus Proxy).
Redemption
proceeds, distributions and dividends payments on the Notes will be made to
Cede
& Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC’s practice is to credit Direct Participants’ accounts
upon DTC's receipt of funds and corresponding detail information from us, on
the
payable date in accordance with their respective holdings shown on DTC’s
records. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and will be the responsibility of such Participant and not of DTC or us, subject
to any statutory or regulatory requirements as may be in effect from time to
time. Payment of redemption proceeds, distributions and dividend payments to
Cede & Co. (or such other nominee as may be requested by an authorized
representative of DTC) is the responsibility of us and the property trustee,
disbursement of the payments to Direct Participants will be the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
Except
as
provided in this prospectus supplement, a Beneficial Owner of Notes will not
be
entitled to receive physical delivery of securities. Accordingly, each
Beneficial Owner must rely on the procedures of DTC to exercise any rights
under
the Notes. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer beneficial interests in a global
security.
DTC
may
discontinue providing its services as securities depository with respect to
the
Notes at any time by giving reasonable notice to us or the sponsor. Under such
circumstances, in the event that a successor depository is not obtained, Note
certificates will be printed and delivered to the holders of record.
Additionally, we may, subject to DTC's procedures, decide to discontinue use
of
the system of book-entry transfers through DTC (or a successor depositary)
with
respect to the Notes. In that event and subject to these procedures,
certificates for the Notes will be printed and delivered to the holders of
record.
We
have
no responsibility for the performance by DTC or its Direct and Indirect
Participants of their respective obligations as described in this prospectus
supplement or under the rules and procedures governing their respective
operations.
UNDERWRITING
Under
the
terms and subject to the conditions contained in an underwriting agreement,
dated the date of this prospectus supplement, we have agreed to sell to each
underwriter named below, for whom Banc of America Securities LLC and Wachovia
Capital Markets, LLC are acting as representatives, the following respective
principal amounts of the Notes:
Underwriter
|
|
Principal
Amount
of Notes
|
|
Banc
of America Securities LLC
|
|
$
|
|
|
Wachovia
Capital Markets, LLC
|
|
|
|
|
HSBC
Securities (USA) Inc.
|
|
|
|
|
UBS
Securities LLC
|
|
|
|
|
Total
|
|
$
|
250,000,000
|
|
The
underwriting agreement provides that the underwriters are obligated to purchase
all of the Notes if any are purchased. The underwriting agreement also provides
that if an underwriter defaults, the purchase commitments of the non-defaulting
underwriters may be increased or the offering of the Notes may be
terminated.
The
underwriting agreement provides that the obligation of the several underwriters
to purchase and pay for the Notes is subject to, among other things, the
approval of certain legal matters by their counsel and certain other
conditions.
The
underwriters propose to offer the Notes initially at the public offering price
set forth on the cover page of this prospectus supplement and to certain dealers
at that price less a selling concession of . % of the principal amount per
Note.
The underwriters may allow, and such dealers may re-allow a concession of .
% of
the principal amount per Note to certain other dealers. After the initial public
offering, the representatives may change the offering price and other selling
terms.
We
estimate that our out-of-pocket expenses for this offering will be approximately
$200,000.
We
have
agreed to indemnify each of the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or to make
certain contribution in respect thereof.
The
Notes
are a new issue of securities with no established trading market. The Notes
will
not be listed on any securities exchange or on any automated dealer quotation
system. The underwriters may make a market in the Notes after completion of
the
offering, but will not be obligated to do so and may discontinue any
market-making activities at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Notes or that an active public
market for the Notes will develop. If an active public trading market for the
Notes does not develop, the market price and liquidity of the Notes may be
adversely affected.
In
connection with the offering of the Notes, the representatives may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Notes. Specifically, the representatives may overallot in connection with the
offering, creating a short position. In addition, the representatives may bid
for, and purchase, the Notes in the open market to cover short positions or
to
stabilize the price of the Notes. Any of these activities may stabilize or
maintain the market price of the Notes above independent market levels, but
no
representation is made hereby of the magnitude of any effect that the
transactions described above may have on the market price of the Notes. The
underwriters will not be required to engage in these activities, and may engage
in these activities, and may end any of these activities at any time without
notice.
The
underwriters and their affiliates have from time to time performed, and
currently perform, various investment or commercial banking and financial
advisory services for us and our subsidiaries in the ordinary course of business
for which they have received, and will receive, reasonable customary
fees.
LEGAL
MATTERS
The
validity of the Notes and certain other matters will be passed upon for us
by
LeBoeuf, Lamb, Greene & MacRae LLP, New York, New York, and for the
underwriters by Nixon Peabody LLP, New York, New York.
EXPERTS
The
financial statements and management's assessment of the effectiveness of
internal control over financial reporting (which is included in Management's
Report on Internal Control over Financial Reporting) incorporated in the
prospectus by reference from our Annual Report on Form 10-K for the year ended
December 31, 2005 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and
accounting.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
In
addition to the information under the heading "Where You Can Find More
Information" in the accompanying prospectus, the SEC allows us to "incorporate
by reference" information into this prospectus supplement and the accompanying
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus supplement
and
the accompanying prospectus. The information filed with the SEC in the future
will automatically update and supersede this information.
We
incorporate by reference the documents listed below and any future filings
made
by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, until all of the securities being offered under this
prospectus supplement are sold:
|
•
|
Our
Annual Report on Form 10-K for the year ended December 31,
2005.
|
|
•
|
Our
Quarterly Report on Form 10-Q for the quarter ended March 31,
2006.
|
|
•
|
Our
Current Reports on Form 8-K dated January 10, 2006, February 9, 2006
(only
with respect to Item 1.01), April 6, 2006 and June 9,
2006.
|
Documents
that we file and which are incorporated by reference are available from us
without charge, excluding all exhibits unless we have specifically incorporated
by reference an exhibit into this prospectus supplement and the accompanying
prospectus. You may obtain documents incorporated by reference in this
prospectus supplement and the accompanying prospectus by writing or
telephoning:
Energy
East Corporation
Manager
of Investor Relations
52
Farm
View Drive
New
Gloucester, Maine 04260-5116
(207)
688-4336
(This
page has been left blank intentionally.)
PROSPECTUS
$1,005,000,000
Energy
East Corporation
Common
Stock
Preferred
Stock
Senior
Debt Securities
Junior
Subordinated Debt Securities
Energy
East Capital Trust II
Trust
Preferred Securities
guaranteed,
to the extent described herein, by
Energy
East Corporation
________________________
This
prospectus contains summaries of the general terms of these securities. Energy
East or Energy East Capital Trust II will provide the specific terms of these
securities, and the manner in which they are being offered, in supplements
to
this prospectus. You should read this prospectus and the applicable prospectus
supplement carefully before you invest.
________________________
The
common stock of Energy East is listed on the New York Stock Exchange under
the
trading symbol “EAS.”
________________________
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
________________________
This
prospectus may not be used to sell securities unless accompanied by a prospectus
supplement. Any statement contained in this prospectus will be deemed to be
modified or superseded by any inconsistent statement contained in an
accompanying prospectus supplement.
________________________
The
date
of this prospectus is July 24, 2003
TABLE
OF CONTENTS
|
Page
|
|
|
ABOUT
THIS PROSPECTUS
|
3
|
WHERE
YOU CAN FIND MORE INFORMATION
|
3
|
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
|
5
|
ENERGY
EAST CORPORATION
|
6
|
RECENT
DEVELOPMENTS
|
7
|
THE
TRUST
|
8
|
USE
OF PROCEEDS
|
8
|
RATIO
OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO FIXED CHARGES
AND
PREFERRED STOCK DIVIDENDS
|
9
|
DESCRIPTION
OF SECURITIES
|
10
|
Capital
Stock
|
10
|
Common
Stock
|
10
|
Preferred
Stock
|
11
|
Anti-Takeover
Effects of Our Charter and By-Laws and Certain Provisions of
Law
|
12
|
Senior
Debt Securities
|
13
|
Junior
Subordinated Debt Securities
|
22
|
Trust
Preferred Securities
|
32
|
Guarantee
|
41
|
Agreement
as to Expenses and Liabilities
|
45
|
Relationship
Among the Trust Preferred Securities, the Guarantee and the Junior
Subordinated Debt Securities held by the Trust
|
45
|
Accounting
Treatment
|
45
|
PLAN
OF DISTRIBUTION
|
46
|
EXPERTS
|
47
|
LEGAL
MATTERS
|
47
|
________________________
In
this
prospectus, references to “we,” “us,” “our” and “Energy East” refer to Energy
East Corporation, unless the context indicates that “we,” “us” or “our” refers
to Energy East Corporation together with its consolidated
subsidiaries.
________________________
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that Energy East and Energy
East
Capital Trust II have filed with the SEC utilizing a “shelf” registration
process. This prospectus also relates to a shelf registration statement that
was
previously filed with the SEC under which $5,000,000 of securities remains
unissued. Under this shelf registration process, any combination of the
securities described in this prospectus may be sold from time to time in one
or
more offerings of one or more series up to a total dollar amount of
$1,005,000,000. This prospectus only provides you with a general description
of
the securities that may be offered. Each time securities are sold, a “prospectus
supplement” will be provided which will contain specific information about the
terms of that offering. Material United States federal income tax considerations
that may be applicable to the offered securities will also be discussed in
the
applicable prospectus supplement.
A
prospectus supplement may also add, update or change information contained
in
this prospectus. You should read both this prospectus and any prospectus
supplement together with the additional information described below under the
heading “Where
You Can Find More Information.”
We
believe that we have included or incorporated by reference in this prospectus
all information material to investors, but certain details that may be important
for specific investment purposes have not been included. For more detail, you
should read the exhibits filed with or incorporated by reference into the
registration statement.
WHERE
YOU CAN FIND MORE INFORMATION
Available
Information
We
file
annual, quarterly and current reports, proxy statements and other information
with the SEC. You may read and copy this information at the SEC’s public
reference room at:
Public
Reference Room
Room
1024
Judiciary
Plaza
450
Fifth
Street, N.W.
Washington,
DC 20549
You
may
call the SEC at 1-800-SEC-0330 for further information on the public reference
room. Our SEC filings are also available to the public from commercial document
retrieval services and at the Internet world wide website that the SEC maintains
at http://www.sec.gov. In addition, materials and information concerning us
can
be inspected at the New York Stock Exchange, 20 Broad Street, 7th Floor, New
York, New York 10005, where our common stock is listed.
This
prospectus is part of a registration statement that we filed with the SEC.
The
full registration statement may be obtained from the SEC or us, as indicated
below. Documents and forms of documents establishing the terms of the offered
securities are filed as exhibits to the registration statement. Statements
in
this prospectus about these documents are summaries. You should refer to the
actual documents for a more complete description of the relevant
matters.
Incorporation
by Reference
The
SEC
allows us to “incorporate by reference” information into this prospectus, which
means that we can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated
by
reference is deemed to be part of this prospectus. The information filed with
the SEC in the future will automatically update and supersede this
information.
We
incorporate by reference the documents listed below and any future filings
made
by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, until all of the securities being offered under this
prospectus or any prospectus supplement are sold:
|
•
|
Our
Annual Report on Form 10-K for the year ended December 31,
2002.
|
|
•
|
Our
Annual Reports on Form 11-K for the year ended December 31,
2002.
|
|
•
|
Our
Quarterly Report on Form 10-Q for the quarter ended March 31,
2003.
|
|
•
|
Our
Current Reports on Form 8-K dated March 5, 2003, April 25, 2003 and
April
29, 2003.
|
Documents
that we file and which are incorporated by reference are available from us
without charge, excluding all exhibits unless we have specifically incorporated
by reference an exhibit into this prospectus. You may obtain documents
incorporated by reference in this prospectus by writing or
telephoning:
Energy
East Corporation
Shareholder
Services
P.O.
Box
3200
Ithaca,
New York 14852-3200
(800)
225-5643
You
should rely only on the information contained or incorporated by reference
in
this prospectus or any prospectus supplement. We have not authorized anyone
to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information contained in this prospectus or any prospectus supplement
is accurate as of any date other than the date of such
documents.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus, any accompanying prospectus supplement and the additional
information described under the heading “Where
You Can Find More Information”
may
contain some forward-looking statements that involve risks and uncertainties.
We
may make these statements about our financial condition, results of operations
and business. These statements may be made directly in this prospectus or any
accompanying prospectus supplement, or may be “incorporated by reference” from
other documents filed with the SEC. You can find many of these statements by
looking for words such as “believes,” “expects,” “anticipates,” “estimates” or
similar expressions. These forward-looking statements are subject to numerous
assumptions, risks and uncertainties. Factors that may cause actual results
to
differ from those indicated by such forward-looking statements include, among
others, the following:
|
•
|
the
deregulation and continued regulatory unbundling of a vertically
integrated industry;
|
|
•
|
our
ability to compete in the rapidly changing and increasingly competitive
electricity and/or natural gas utility
markets;
|
|
•
|
regulatory
uncertainty in a politically-charged environment of changing energy
prices;
|
|
•
|
operation
of the New York Independent System Operator and ISO New England,
Inc.;
|
|
•
|
operation
of a regional transmission
organization;
|
|
•
|
our
ability to recover nonutility generator and other
costs;
|
|
•
|
changes
in fuel supply or cost and the success of strategies to satisfy power
requirements now that most generation assets have been
sold;
|
|
•
|
our
ability to integrate the operations of Berkshire Energy Resources,
CMP
Group, Inc., Connecticut Energy Corporation, CTG Resources, Inc.
and RGS
Energy Group, Inc. with our operations and to achieve enterprise-wide
integration synergies;
|
|
•
|
our
ability to obtain adequate and timely rate
relief;
|
|
•
|
nuclear
or environmental incidents;
|
|
•
|
legal
or administrative proceedings;
|
|
•
|
changes
in the cost or availability of
capital;
|
|
•
|
the
effect of the volatility in the equity markets on pension benefit
costs;
|
|
•
|
growth
in the areas in which we are doing
business;
|
|
•
|
weather
variations affecting customer energy
usage;
|
|
•
|
authoritative
accounting guidance;
|
|
•
|
acts
of terrorists; and
|
|
•
|
other
considerations that may be disclosed from time to time in our publicly
disseminated documents or filings.
|
You
should not place undue reliance on the forward-looking statements, which speak
only as of the date of this prospectus or any prospectus supplement, or, in
the
case of a document incorporated by reference, the date of that
document.
The
cautionary statements in this section expressly qualify, in their entirety,
all
subsequent forward-looking statements attributable to us or any person acting
on
our behalf. We do not undertake any obligation
to release publicly any revisions to the forward-looking statements to reflect
events or circumstances occurring after the date of this prospectus, any
prospectus supplement or documents incorporated by reference.
ENERGY
EAST CORPORATION
We
are a
New York public utility holding company organized in 1997. We are a
super-regional energy services and delivery company with operations in New
York,
Connecticut, Massachusetts, Maine and New Hampshire and corporate offices in
New
York and Maine. On February 8, 2000, we completed our merger with Connecticut
Energy Corporation, which is a holding company primarily engaged in the retail
distribution of natural gas in Connecticut through its wholly owned subsidiary,
The Southern Connecticut Gas Company. On September 1, 2000, we completed our
mergers with CMP Group, Inc., CTG Resources, Inc. and Berkshire Energy
Resources. CMP Group is a holding company and its principal operating
subsidiary, Central Maine Power Company, is primarily engaged in transmitting
and distributing electricity generated by others to retail customers in Maine.
CTG Resources, also a holding company, is the parent company of Connecticut
Natural Gas Corporation, a regulated natural gas distribution company in
Connecticut. Berkshire Energy is a holding company and the parent company of
The
Berkshire Gas Company, a regulated natural gas distribution company that
operates in western Massachusetts. On June 28, 2002, we completed our merger
with RGS Energy Group, Inc. RGS Energy Group is a holding company whose
principal operating subsidiaries are New York State Electric & Gas
Corporation and Rochester Gas and Electric Corporation.
Our
principal energy delivery business is transmitting, distributing and generating
electricity in upstate New York and Maine and transporting, storing and
distributing natural gas in upstate New York, Connecticut, Maine and
Massachusetts. We serve approximately 1.8 million electricity customers and
900,000 natural gas customers. Our service territories reflect diversified
economies, including high-tech firms, insurance, light industry, consumer goods
manufacturing, pulp and paper, ship building, colleges and universities,
agriculture, and fishing and recreational facilities. No customer accounts
for
more than 5% or more of either electric or natural gas revenues.
Our
address is P.O. Box 12904, Albany, New York 12212-2904 and our telephone number
is (518) 434-3049.
Utility
Operations
New
York State Electric & Gas Corporation.
New
York State Electric & Gas Corporation (“NYSEG”)
is a
public utility company primarily engaged in transmitting and distributing
electricity and transporting, storing and distributing natural gas. NYSEG’s
service territory, 99% of which is located outside the corporate limits of
cities, is in the central, eastern and western parts of the State of New York.
NYSEG’s service territory has an area of approximately 20,000 square miles and a
population of approximately 2,500,000. The larger cities in New York in which
NYSEG serves both electricity and natural gas customers are Binghamton, Elmira,
Auburn, Geneva, Ithaca and Lockport. NYSEG provides delivery service to
approximately 838,000 electricity customers and 250,000 natural gas
customers.
Rochester
Gas and Electric Corporation.
Rochester Gas and Electric Corporation (“RG&E”)
is a
public utility company engaged in generating, transmitting and distributing
electricity and transporting and distributing natural gas. RG&E generates
electricity from one nuclear plant, one coal-fired plant, three gas turbine
plants and several smaller hydroelectric stations. RG&E’s service territory
includes the city of Rochester, a major industrial center in the State of New
York and a substantial suburban area with a large and prosperous agricultural
area. RG&E’s service territory has an area of approximately 2,800 square
miles and a population of approximately 1,000,000. RG&E provides delivery
service to approximately 355,000 electricity customers and 291,000 natural
gas
customers.
Central
Maine Power Company.
Central
Maine Power is an electric transmission and distribution utility in Maine.
Central Maine Power serves approximately 564,000 customers in its 11,000
square-mile service area in the southern and central areas of Maine. Central
Maine Power’s service area contains most of Maine’s industrial and commercial
centers, including the city of Portland and the Lewiston-Auburn,
Augusta-Waterville and Bath-Brunswick areas. These areas encompass approximately
1,000,000 people.
The
Southern Connecticut Gas Company.
Southern Connecticut Gas is engaged in the retail distribution of natural gas
for residential, commercial and industrial users and the transportation of
natural gas for commercial and industrial users. Southern Connecticut Gas serves
approximately 171,000 customers in the State of Connecticut, primarily in towns
along the southern Connecticut coast from Westport to Old Saybrook, which
include the urban communities of Bridgeport and New Haven, covering an area
of
approximately 500 square miles with a population of approximately 800,000.
Southern Connecticut Gas is the sole distributor of natural gas other than
bottled gas in its service area.
Connecticut
Natural Gas Corporation.
Connecticut Natural Gas is engaged in the retail distribution of natural gas
for
residential, commercial and industrial users and the transportation of natural
gas for commercial and industrial users. Connecticut Natural Gas currently
serves approximately 152,000 customers in Connecticut, principally in the
Hartford-New Britain area and Greenwich, covering an area of approximately
900
square miles with a population of approximately 800,000.
The
Berkshire Gas Company.
Berkshire Gas sells and distributes natural gas to approximately 35,000 retail
customers in western Massachusetts, including Pittsfield and North Adams,
covering an area of approximately 1,000 square miles. The population of the
area
served is approximately 190,000 and is primarily residential in character,
but
the territory also includes industrial, agricultural, educational, cultural
and
resort facilities.
Other
Operations
Our
other
businesses include a nonutility generating company, a liquid fuels distribution
company, a retail energy marketing company, telecommunications assets, a propane
distribution company, a district heating and cooling system and a Federal Energy
Regulatory Commission regulated liquefied natural gas peaking
plant.
RECENT
DEVELOPMENTS
In
May
2003, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 150, Accounting for Certain Financial Instruments
with
Characteristics of both Liabilities and Equity. Statement 150 establishes
standards for how certain financial instruments with characteristics of both
liabilities and equity are classified and measured. Under previous guidance,
those instruments could have been classified as equity. We will be required
to
classify as a liability our mandatorily redeemable preferred stock and
mandatorily redeemable trust preferred securities, which we previously had
classified as preferred stock of subsidiaries on our statements of financial
position. Statement 150 is effective at the beginning of the first interim
period beginning after June 15, 2003 for instruments existing when Statement
150
was issued. We will adopt Statement 150 on July 1, 2003.
THE
TRUST
The
trust
is a statutory trust formed in 2001 under Delaware law by us, as sponsor for
the
trust, and Chase Manhattan Bank USA, National Association, who serves as trustee
in the State of Delaware for the purpose of complying with the provisions of
the
Delaware Statutory Trust Act. The trust agreement for the trust will be amended
and restated each time additional trust preferred securities are issued by
the
trust. The amended trust agreement will be qualified as an indenture under
the
Trust Indenture Act of 1939.
The
trust
exists for the exclusive purposes of:
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issuing
two classes of trust securities—trust preferred securities and trust
common securities—which together represent undivided beneficial interests
in the assets of the trust;
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investing
the gross proceeds of the trust securities in our junior subordinated
debt
securities;
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making
distributions; and
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engaging
in only those other activities necessary, advisable or incidental
to the
purposes listed above.
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Our
junior subordinated debt securities will constitute substantially all of the
assets of the trust, and our payments under the junior subordinated debt
securities and the related agreement as to expenses and liabilities will
constitute substantially all of the revenue of the trust.
Separate
financial statements for the trust are not included in this prospectus. We
do
not believe that such financial statements would be material to holders of
the
trust preferred securities because the trust does not have any independent
operations and the sole purpose of the trust is as described above. We do not
expect that the trust will file annual, quarterly or special reports with the
SEC.
The
address of the trust is c/o Energy East Corporation, P.O. Box 12904, Albany,
NY
12212-2904.
USE
OF PROCEEDS
Unless
we
indicate differently in the applicable prospectus supplement which accompanies
this prospectus, we intend to use the net proceeds from the sale of the offered
securities for general corporate purposes, which may include, among other
things, reduction of short-term debt, financing our construction program,
additions to working capital and repurchases or refinancings of securities.
We
may also invest funds not immediately required for such purposes in short-term
investment grade securities. The amount and timing of sales of the offered
securities will depend on market conditions and the availability of other
funds.
RATIO
OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The
following table sets forth our consolidated ratio of earnings to fixed charges
and our consolidated ratio of earnings to fixed charges and preferred stock
dividends for the three months ended March 31, 2003, and the five most recent
fiscal years:
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Three
Months Ended
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Year
Ended December 31,
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March
31,
2003(2)
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2002(3)
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2001(4)
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2000
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1999(5)
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1998
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Ratio
of earnings to fixed charges(1)
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3.83
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1.96
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2.43
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3.47
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4.20
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3.34
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Ratio
of earnings to fixed charges and preferred stock dividends(1)(6)
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3.83
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1.96
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2.43
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3.47
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4.20
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3.34
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_________________________
(1)
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The
ratio of earnings to fixed charges is calculated by dividing earnings
by
fixed charges. The ratio of earnings to fixed charges and preferred
stock
dividends is calculated by dividing earnings by fixed charges and
preferred stock dividends. For this purpose, earnings means income
from
continuing operations before income taxes and fixed charges. Fixed
charges
means all interest charges, the interest component of rentals and
preferred stock dividends of
subsidiaries.
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(2)
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Financial
results for interim periods are not necessarily indicative of trends
for a
12-month period.
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(3)
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Our
earnings for 2002 includes a $12 million writedown of an investment
in
NEON Communications, Inc. and a $41 million effect from restructuring
expenses. Excluding those two amounts, these earnings ratios for
the
period would have been 2.13.
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(4)
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Our
earnings for 2001 includes a $78 million writedown of an investment
in
NEON Communications, Inc. Excluding the $78 million, these earnings
ratios
for the period would have been
2.76.
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(5)
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Our
earnings for 1999 includes $84 million that we paid in federal income
taxes as a result of the sale of our coal-fired generation assets.
Excluding the $84 million, these earnings ratios for the period would
have
been 3.59.
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(6)
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We
have not previously issued preferred stock and we therefore have
never
declared any preferred stock
dividends.
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DESCRIPTION
OF SECURITIES
Capital
Stock
Our
authorized capital stock consists of 300,000,000 shares of common stock, $0.01
par value per share, of which 145,780,313 shares were issued and outstanding
as
of June 12, 2003, and 10,000,000 shares of preferred stock, $0.01 par value
per
share, none of which is issued or outstanding.
The
following summary description of our capital stock is qualified in its entirety
by reference to our Restated Certificate of Incorporation, as amended
(“Charter”),
our
By-Laws and the New York Business Corporation Law. We refer you to our Charter
and By-Laws for the full provisions. Copies of our Charter and By-Laws have
been
filed with the SEC as exhibits to the registration statement, of which this
prospectus forms a part, and are incorporated in the prospectus by
reference.
Common
Stock
Dividends
Subject
to any preferential dividend rights of our preferred stock, if any should become
outstanding, dividends on our common stock will be paid if, when and as
determined by our board of directors from time to time out of funds legally
available for that purpose.
Voting
Rights
Holders
of our common stock are entitled to one vote for each share held by them on
all
matters submitted to the shareholders and are entitled to cumulative voting
in
the election of directors. Our Charter provides for the adoption of a plan
of
merger or consolidation by the affirmative vote of the shareholders entitled
to
cast a majority of the votes entitled to be cast. Our Charter and By-Laws
require the affirmative vote of the shareholders entitled to cast two-thirds
of
the votes entitled to be cast in order for shareholders to alter, amend, repeal,
or adopt any provision inconsistent with, certain specified provisions of our
By-Laws. Our board of directors is divided into three classes serving staggered
three year terms.
Liquidation
In
the
event of any liquidation, dissolution or winding up of our company, either
voluntary or involuntary, after payment or provision for payment shall have
been
made of the amounts to which the holders of our preferred stock shall be
entitled under the provisions of any series of our preferred stock established
by the board of directors, the holders of our common stock will be entitled,
to
the exclusion of the holders of our preferred stock of any series, to share
ratably, according to the number of shares held by them, in all remaining assets
of ours available for distribution.
Preemptive
and Other Rights
The
holders of our capital stock are not entitled to any preemptive rights to
subscribe for or purchase any part of any issue, sale or offering of any shares
of our capital stock of any class or series, now or hereafter authorized, or
of
any options, warrants or rights to subscribe for or purchase any such shares,
or
of any securities convertible into, exchangeable for, or carrying options,
warrants or rights to subscribe for or purchase, any such shares, regardless
of
whether such issue, sale or offering is for cash, property, services or
otherwise. Our common stock is not subject to redemption or to any further
calls
or assessments and is not entitled to the benefit of any sinking fund
provisions. The shares of our common stock to be issued in connection with
any
applicable prospectus supplement, when issued, will be fully paid and
non-assessable.
Listing
Our
common stock is listed on the New York Stock Exchange under the trading symbol
“EAS.”
Transfer
Agent and Registrar
The
Transfer Agent and Registrar for our common stock is Mellon Investor Services,
L.L.C., P.O. Box 3315, South Hackensack, New Jersey 07606.
Preferred
Stock
The
following summarizes briefly some general terms of our preferred stock. You
should read the terms of any series of preferred stock, which will be described
in more detail in an applicable prospectus supplement. If indicated in an
applicable prospectus supplement, the terms of any series may differ from the
terms described below. You should also read the more detailed provisions of
our
Charter and the applicable certificate of amendment relating to each particular
series of preferred stock, which will be filed or incorporated by reference
as
an exhibit to the registration statement of which this prospectus is a part,
for
provisions that may be important to you.
With
respect to each series of preferred stock, our board of directors may determine,
among other things, the following:
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the
serial designation;
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the
number of shares included;
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the
dividend rate and dividend periods, and whether dividends will be
cumulative;
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the
relative rights in the event of our voluntary or involuntary liquidation,
dissolution or winding-up;
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any
redemption provisions;
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any
sinking fund provisions;
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any
conversion or exchange provisions;
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any
voting rights in addition to those provided by law;
and
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any
other relative rights, preferences, or
limitations.
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The
shares of each series of preferred stock will be, when issued, fully paid and
non-assessable and holders will have no preemptive rights.
The
preferred stock will rank, with respect to dividends and upon our liquidation,
dissolution or winding up, senior to all classes of our common
stock.
The
Transfer Agent and Registrar for our preferred stock is Mellon Investor
Services, L.L.C., P.O. Box 3315, South Hackensack, New Jersey
07606.
Anti-Takeover
Effects of Our Charter and By-Laws and Certain Provisions of
Law
Certain
provisions of our Charter and By-Laws may make it more difficult to acquire
control over our company by various means. These provisions could deprive
shareholders of opportunities to realize a premium on the shares of our common
or preferred stock owned by them. In addition, these provisions may adversely
affect the market price of our common or preferred stock. These provisions
are
intended to:
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enhance
the likelihood of continuity and stability in the composition of
our board
of directors and in the policies formulated by our board of
directors;
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discourage
certain types of transactions which may involve an actual or threatened
change in control of our company;
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discourage
certain tactics that may be used in proxy
fights;
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encourage
persons seeking to acquire control of our company to consult first
with
our board of directors to negotiate the terms of any proposed business
combination or offer; and
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reduce
our vulnerability to an unsolicited proposal for a takeover that
does not
contemplate the acquisition of all of our outstanding shares of common
stock or that is otherwise unfair to our
shareholders.
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Reference
is made, and the following discussion is qualified in its entirety by reference,
to the specific provisions contained in our Charter and By-Laws, which appear
as
exhibits to the registration statement of which this prospectus is a part,
and
to the relevant provisions of the New York Business Corporation
Law.
Our
Charter provides that our board of directors shall be divided into three classes
of as nearly equal size as possible, with directors in each class being elected
for terms of three years. The classification of the board has the effect of
requiring at least two annual shareholder meetings, instead of one, to replace
a
majority of the members of the board. The By-Laws authorize our board of
directors to fill vacancies, including newly created directorships. Accordingly,
this provision could enable our board of directors to prevent a shareholder
from
obtaining majority representation on the board by enlarging the board of
directors and filling the new directorships with its own nominees. This would
also encourage any person who may attempt to take over out- company to deal
with
our board of directors. The By-Laws also provide that, except as otherwise
provided by statute, directors may be removed by shareholders only for cause
and
only by affirmative vote of holders of a majority of the outstanding shares
of
our common stock. Directors may not be removed without cause by the
shareholders, except in the case of a director elected by the holders of any
class or series of our stock which may then be outstanding (other than the
common stock), voting separately as a class or series, if provided by our
Charter. Shareholders would therefore have more difficulty in forcing changes
in
the composition of our board of directors.
Our
By-Laws provide that special meetings of our shareholders may be called only
by
the chairman of the board of directors or the president and must be called
by
the chairman, president or secretary at the request in writing of a majority
of
directors or a majority of the outstanding shares of common stock. This
limitation on the right of shareholders to call a special meeting could make
it
more difficult for shareholders to initiate actions that are opposed by our
board of directors. These actions could include the removal of an incumbent
director, the election of a shareholder nominee as a director or the
implementation of a rule requiring shareholder ratification of defensive
strategies with respect to unsolicited takeover bids. In addition, the limited
ability of the shareholders to call a special meeting of shareholders may make
it more difficult to change our existing board and management.
Our
By-Laws provide that shareholders seeking to bring business before an annual
meeting of shareholders, or to nominate candidates for election as directors
at
an annual meeting or at a special meeting of shareholders called for the purpose
of electing directors, must provide timely notice thereof in writing. The
By-Laws also specify certain requirements as to the timeliness, form and content
of a shareholder’s notice. These provisions may preclude shareholders from
bringing matters before an annual meeting of shareholders or from making
nominations for directors at an annual meeting or special meeting of
shareholders.
Authorized
but unissued shares of common stock and preferred stock are available for future
issuance by our board of directors without shareholder approval. In particular,
our board of directors is authorized to issue “blank check” preferred stock,
with such terms, rights and preferences as it may determine. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans. The existence of authorized but unissued shares of
common stock and preferred stock could render more difficult or discourage
an
attempt to obtain control of our company by means of a proxy contest, tender
offer, merger or otherwise.
The
New
York Business Corporation Law provides generally that the affirmative vote
of a
majority of the shares entitled to vote on any matter is required to amend
a
corporation’s certificate of incorporation or by-laws, unless a corporation’s
certificate of incorporation or by-laws, as the case may be, requires a greater
percentage. Our Charter and By-Laws impose a two-thirds supermajority vote
requirement in connection with the amendment of certain provisions of our
By-Laws by our shareholders, including those provisions relating to the election
and removal of directors, the ability of shareholders to call special meetings
and the ability of shareholders to bring business before an annual meeting
or to
nominate directors. In addition, we are subject to the provisions of Section
912
of the New York Business Corporation Law, which prohibits a New York corporation
from engaging in any business combination with an interested shareholder unless
such business combination or the original acquisition of stock was approved
by
the corporation’s board of directors. Certain acquisitions of our common stock
could also require approval of the SEC under the Public Utility Holding Company
Act of 1935 as well as certain federal and state energy regulatory approval,
depending on the structure and the details of the transaction. These provisions
could prohibit, delay or discourage the accomplishment of mergers, takeovers
or
change in control attempts with respect to our company and, accordingly, may
discourage attempts to acquire our company.
Senior
Debt Securities
The
following description sets forth the general terms and provisions of the senior
debt securities that we may offer by this prospectus. The senior debt securities
will rank equally with all of our other unsecured and unsubordinated
debt.
The
senior debt securities will be issued under an existing senior indenture between
us and JPMorgan Chase Bank, as trustee. The senior indenture is an exhibit
to
the registration statement, of which this prospectus forms a part, and is
incorporated by reference. The senior indenture gives us broad authority to
set
the particular terms of each series of senior debt securities, including the
right to modify certain of the terms contained in the senior indenture. The
particular terms of a series of senior debt securities and the extent, if any,
to which the particular terms of the issue modify the terms of the senior
indenture will be described in the applicable prospectus supplement relating
to
the senior debt securities.
The
senior indenture contains the full text of the matters described in this
section. Because this section is a summary, it does not describe every aspect
of
the senior debt securities or the senior indenture. This summary is subject
to
and qualified in its entirety by reference to all the provisions of the senior
indenture, including definitions of terms used in that indenture. We also
include references in parentheses to certain sections of the senior indenture.
Whenever we refer to particular sections of, or defined terms used in, the
senior indenture in this prospectus or in the applicable prospectus supplement,
these sections or defined terms are incorporated by reference herein or in
the
prospectus supplement. This summary also is subject to and qualified by
reference to the description of the particular terms of the senior debt
securities described in the applicable prospectus supplement or
supplements.
Prospective
purchasers of senior debt securities should be aware that special U.S. federal
income tax, accounting and other considerations may be applicable to the senior
debt securities of a particular series. The applicable prospectus supplement
will describe these considerations, if they apply.
There
is
no requirement under the senior indenture that future issues of our senior
debt
securities be issued under that indenture. We will be free to use other
indentures or documentation, containing provisions different from those included
in the senior indenture or applicable to one or more issues of senior debt
securities, in connection with future issues of other debt
securities.
General
The
senior indenture does not limit the aggregate principal amount of senior debt
securities that we may issue under that indenture. The senior indenture provides
that the senior debt securities may be issued in one or more series. The senior
debt securities may be issued at various times and may have differing maturity
dates and may bear interest at differing rates. We need not issue all senior
debt securities of one series at the same time and, unless otherwise provided,
we may reopen a series, without the consent of the holders of securities of
that
series, for issuances of additional senior debt securities of that
series.
Prior
to
the issuance of each series of senior debt securities, the particular terms
will
be specified in a supplemental indenture, a board resolution or in one or more
officer’s certificates authorized pursuant to a board resolution. We refer you
to the applicable prospectus supplement for a description of the following
terms
of the series of senior debt securities:
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title
of the senior debt securities;
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any
limit on the aggregate principal amount of the senior debt
securities;
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the
person to whom any interest on the senior debt securities shall be
payable, if other than the person in whose name those securities
are
registered at the close of business on the regular record
date;
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the
date or dates on which the principal of the senior debt securities
will be
payable or how the date or dates will be
determined;
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the
rate or rates at which the senior debt securities will bear interest,
or
how the rate or rates will be determined and the date or dates from
which
interest will accrue;
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the
dates on which interest will be
payable;
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the
record dates for payments of
interest;
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the
place or places, if any, in addition to the office of the senior
indenture
trustee, where the principal of, and premium, if any, and interest,
if
any, on the senior debt securities will be
payable;
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the
period or periods within which, the price or prices at which, and
the
terms and conditions upon which, the senior debt securities may be
repaid,
in whole or in part, at the option of the holder
thereof;
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any
sinking fund or other provisions or options held by holders of the
senior
debt securities that would obligate us to repurchase or redeem those
securities;
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the
percentage, if less than 100%, of the principal amount of the senior
debt
securities that will be payable if the maturity of those securities
is
accelerated;
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any
changes or additions to the events of default under the senior indenture
or changes or additions to our covenants under that
indenture;
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any
collateral, security, assurance or guarantee for the senior debt
securities; and
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any
other specific terms applicable to the senior debt
securities.
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Unless
we
indicate differently in the applicable prospectus supplement, the senior debt
securities will be denominated in United States currency in minimum
denominations of $1,000 and multiples of $1,000.
Unless
we
indicate differently in the applicable prospectus supplement, there are no
provisions in the senior indenture or the senior debt securities that require
us
to redeem, or permit the holders to cause a redemption of, the senior debt
securities or that otherwise protect the holders in the event that we incur
substantial additional indebtedness, whether or not in connection with a change
in control of our company.
Security
and Ranking
We
conduct our operations primarily through our subsidiaries and substantially
all
of our consolidated assets are held by our subsidiaries. Accordingly, our cash
flow and our ability to meet our obligations under the senior debt securities
are largely dependent upon the earnings of our subsidiaries and the distribution
or other payment of these earnings to us in the form of dividends or advances
and repayment of loans and advances from us. Our subsidiaries are separate
and
distinct legal entities and have no obligation to pay any amounts due on our
senior debt securities or to make any funds available for payment of amounts
due
on our senior debt securities.
Because
we are a holding company, our obligations under the senior debt securities
will
be effectively subordinated to all existing and future liabilities of our
subsidiaries. Therefore, our rights and the rights of our creditors, including
the rights of the holders of our senior debt securities, to participate in
any
distribution of assets of any of our subsidiaries, when such subsidiary is
liquidated or reorganized, is subject to the prior claims of the subsidiary’s
creditors. To the extent that we may be a creditor with recognized claims
against any of our subsidiaries, our claims would still be effectively
subordinated to any security interest in, or mortgages or other liens on, the
assets of the subsidiary and would be subordinated to any indebtedness or other
liabilities of the subsidiary that are senior to that held by us.
The
junior subordinated debt securities may be presented for exchange, and may
be
presented for registration of transfer (with the form of transfer endorsed,
or a
duly executed satisfactory written instrument of transfer), at the office of
the
appropriate securities registrar or at the office of any transfer agent
designated by us for such purpose and referred to in the applicable prospectus
supplement. There will be no service charge for any exchange or registration
of
transfer, although payment of certain taxes and other governmental charges
as
described in the subordinated indenture may be required. We will appoint the
subordinated indenture trustee as securities registrar under the subordinated
indenture. If we designate any transfer agents (in addition to the securities
registrar) with respect to any series of junior subordinated debt securities
in
the applicable prospectus supplement, we may rescind that designation or approve
a change in the location where such transfer agent acts at any time, provided
that we maintain a transfer agent in each place of payment for such series.
We
may designate additional transfer agents with respect to any series of junior
subordinated debt securities at any time. (See section 2.5 of the subordinated
indenture.)
Payment
and Paying Agents
Unless
we
indicate differently in the applicable prospectus supplement, we will pay
interest on our senior debt securities on each interest payment date by check
mailed to the person in whose name that security is registered as of the close
of business on the regular record date relating to the interest payment date,
except that interest payable at stated maturity, upon redemption or otherwise,
will be paid to the person to whom principal is paid. However, if we default
in
paying interest on a senior debt security, we will pay defaulted interest to
the
registered owner of that security in one of the following ways:
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we
will first propose to the senior indenture trustee a payment date
for the
defaulted interest. Next, the senior indenture trustee will choose
a
special record date for determining which registered holders are
entitled
to the payment. The special record date will be between 10 and 15
days
before the payment date we propose. Finally, we will pay the defaulted
interest on the payment date to the registered holder of the senior
debt
security as of the close of business on the special record date;
or
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we
can propose to the senior indenture trustee any other lawful manner
of
payment that is consistent with the requirements of any securities
exchange on which the senior debt securities may be listed for trading.
If
the senior indenture trustee thinks the proposal is practicable,
payment
will be made as proposed.
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Redemption
We
will
set forth any terms for the redemption of senior debt securities in a prospectus
supplement. Unless we indicate differently in the applicable prospectus
supplement, and except with respect to senior debt securities redeemable at
the
option of the registered holder, senior debt securities will be redeemable
upon
notice by mail between 30 and 60 days prior to the redemption date. If less
than
all of the senior debt securities of any series or any tranche of a series
are
to be redeemed, the senior indenture trustee will select the senior debt
securities to be redeemed and will choose the method of random selection it
deems fair and appropriate. (See sections 301, 1103 and 1104 of the senior
indenture.)
Senior
debt securities will cease to bear interest on the redemption date. We will
pay
the redemption price and any accrued interest to the redemption date once you
surrender those securities for redemption. (See section 1106 of the senior
indenture.)
If
only
part of a senior debt security is redeemed, the senior indenture trustee will
deliver to you a new senior debt security of the same series for the remaining
portion without charge. (See section 1107 of the senior indenture.)
We
may
make any redemption conditional upon the receipt by the paying agent, on or
prior to the date fixed for redemption, of money sufficient to pay the
redemption price. If the paying agent has not received the money by the date
fixed for redemption, we will not be required to redeem the senior debt
securities. (See section 1104 of the senior indenture.)
Registration,
Transfer, Exchange and Form
The
senior debt securities will be issued only in fully registered form, without
interest coupons and in denominations that are even multiples of $1,000. Senior
debt securities of any series will be exchangeable for other senior debt
securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. (See section 305 of the senior
indenture.)
Unless
we
indicate differently in the applicable prospectus supplement, senior debt
securities may be presented for registration of transfer, duly endorsed or
accompanied by a duly executed written instrument of transfer, at the office
or
agency maintained for such purpose, without service charge except for
reimbursement of taxes and other governmental charges as described in the senior
indenture. (See section 305 of the senior indenture.)
In
the
event of any redemption of senior debt securities of any series, the senior
indenture trustee will not be required to exchange or register a transfer of
any
senior debt security of the series selected, called or being called for
redemption except the unredeemed portion of any senior debt security being
redeemed in part. (See section 305 of the senior indenture.)
Book-Entry
Only System
The
following discussion pertains to senior debt securities that are issued in
book-entry only form.
One
or
more global notes would be issued to DTC, The Depository Trust Company, or
its
nominee. DTC would keep a computerized record of its participants (for example,
your broker) whose clients have purchased the senior debt securities. The
participant would then keep a record of its clients who purchased those
securities. A global note may not be transferred, except that DTC, its nominees
and their successors may transfer an entire global note to one
another.
Under
book-entry only, we will not issue certificates to individual holders of the
senior debt securities. Beneficial interests in global notes will be shown
on,
and transfers of beneficial interests in global notes will be made only through,
records maintained by DTC and its participants.
DTC
has
advised us that it is:
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a
limited-purpose trust company organized under the New York Banking
Law;
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a
“banking organization” within the meaning of the New York Banking
Law;
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a
member of the Federal Reserve
System;
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a
“clearing corporation” within the meaning of the New York Uniform
Commercial Code; and
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a
“clearing agency” registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of
1934.
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DTC
holds
securities that its participants deposit with DTC. DTC also facilitates the
settlement among direct participants of securities transactions, such as
transfers and pledges, in deposited securities through computerized records
for
direct participants’ accounts. This eliminates the need to exchange
certificates. Direct participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other
organizations.
DTC’s
book-entry system is also used by other organizations such as securities brokers
and dealers, banks and trust companies that work through a direct participant.
The rules that apply to DTC and its participants are on file with the
SEC.
DTC
is
owned by a number of its direct participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc.
We
will
wire principal and interest payments to DTC’s nominee. We and the senior
indenture trustee will treat DTC’s nominee as the owner of the global notes for
all purposes. Accordingly, we and the senior indenture trustee will have no
direct responsibility or liability to pay amounts due on the senior debt
securities to owners of beneficial interests in the global notes.
It
is
DTC’s current practice, upon receipt of any payment of principal or interest, to
credit direct participants’ accounts on the payment date according to their
respective holdings of beneficial interests in the global notes as shown on
DTC’s records as of the record date for such payment. In addition, it is DTC’s
current practice to assign any consenting or voting rights to direct
participants whose accounts are credited with securities on a record date,
by
using an omnibus proxy. Payments by participants to owners of beneficial
interests in the global notes, and voting by participants, will be governed
by
the customary practices between the participants and owners of beneficial
interests, as is the case with securities held for the account of customers
registered in “street name.” However, these payments will be the responsibility
of the participants and not of ours, DTC or the senior indenture
trustee.
Senior
debt securities represented by a global note will be exchangeable for senior
debt securities certificates with the same terms in authorized denominations
only if:
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DTC
notifies us that it is unwilling or unable to continue as depository
or if
DTC ceases to be a clearing agency registered under applicable
law;
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we
instruct the senior indenture trustee that the global note is now
exchangeable; or
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an
event of default has occurred and is
continuing.
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According
to DTC, the foregoing information with respect to DTC has been provided to
the
financial community for informational purposes only and is not intended to
serve
as a representation, warranty, or contract modification of any
kind.
Consolidation,
Merger; Conveyance, Sale or Transfer
We
have
agreed not to consolidate with or merge into any other entity or convey,
transfer, or lease our properties and assets substantially as an entirety to
any
entity unless:
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the
successor is an entity organized and existing under the laws of the
United
States of America or any State or the District of
Columbia;
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the
successor expressly assumes by a supplemental indenture the due and
punctual payment of the principal of, and premium, if any, and interest
on
all the outstanding senior debt securities and the performance of
every
covenant of the senior indenture that we would otherwise have to
perform;
and
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immediately
after giving effect to the transactions, no event of default and
no event
which after notice or lapse of time or both would become an event
of
default, will have occurred and be continuing. (See section 801 of
the
senior indenture.)
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Limitation
on Secured Debt
If
this
covenant is made applicable to the senior debt securities of any particular
series, we have agreed that we will not create, issue, incur or assume any
Secured Debt (as defined below) without the consent of the holders of a majority
in principal amount of the outstanding senior debt securities of all series
with
respect to which this covenant is made (for purposes of this section, we refer
to all such senior debt securities as “Benefitted Securities”),
considered as one class; provided, however, that the foregoing covenant will
not
prohibit the creation, issuance, incurrence or assumption of any senior debt
securities by us if either:
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we
secure all Benefitted Securities then outstanding equally and ratably
with
the Secured Debt; or
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we
deliver to the senior indenture trustee bonds, notes or other evidences
of
indebtedness secured by a Lien (as defined below) which secures the
Secured Debt in an aggregate principal amount equal to the aggregate
principal amount of the Benefitted Securities then outstanding and
meeting
certain other requirements in the senior
indenture.
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“Debt,”
for
purposes of this section, means:
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indebtedness
for borrowed money evidenced by a bond, debenture, note or other
written
instrument or agreement by which we are obligated to repay such borrowed
money; and
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any
guaranty by us of any such indebtedness of another
person.
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“Lien,”
for
purposes of this section, means any lien, deed of trust, pledge or security
interest.
“Secured
Debt,”
for
purposes of this section, means Debt created, issued, incurred or assumed by
us
which is secured by a Lien upon any shares of stock of any Significant
Subsidiary, as defined in Regulation S-X of the rules and regulations under
the
Securities Act of 1933, whether owned at the date of the initial authentication
and delivery of the senior debt securities of any series or thereafter acquired.
(See section 1007 of the senior indenture.)
Modification
of the Senior Indenture
Under
the
senior indenture or any indenture supplemental thereto, our rights and the
rights of the holders of senior debt securities may be changed with the consent
of the holders representing a majority in principal amount of the outstanding
senior debt securities of all series affected by the change, voting as one
class, provided that the following changes may not be made without the consent
of the holders of each outstanding senior debt security affected
thereby:
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change
the fixed date upon which the principal of or the interest on any
senior
debt security is due and payable, or reduce the principal amount
thereof
or the rate of interest thereon or any premium payable upon the redemption
thereof, or reduce the amount of the principal of an original issue
discount senior debt security that would be payable upon a declaration
of
acceleration of the maturity thereof, or change any place of payment
where, or the currency in which, any senior debt security or any
premium,
if any, or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any payment on or after the
date
such payment is due or, in the case of redemption, on or after the
date
fixed for such redemption;
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reduce
the stated percentage of senior debt securities, the consent of the
holders of which is required for any modification of the senior indenture
or for waiver by the holders of certain of their rights;
or
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modify
certain provisions of the senior indenture. (See section 902 of the
senior
indenture.)
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An
original issue discount senior debt security means any security authenticated
and delivered under the senior indenture which provides for an amount less
than
the principal amount thereof to be due and payable upon the declaration of
acceleration of the maturity thereof.
The
senior indenture also contains provisions permitting us and the senior indenture
trustee to amend the senior indenture in certain circumstances, without the
consent of the holders of any senior debt securities, to evidence a merger,
the
replacement of the senior indenture trustee and for certain other purposes.
(See
section 901 of the senior indenture.)
Events
of Default
An
event
of default with respect to any series of senior debt securities is defined
in
the senior indenture as being any one of the following:
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failure
to pay interest on the senior debt securities of that series for
30 days
after payment is due;
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failure
to pay principal of, or premium, if any, on, the senior debt securities
of
that series when due;
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failure
to perform other covenants in the senior indenture for 60 days after
we
are given written notice from the senior indenture trustee or the
senior
indenture trustee receives written notice from the registered owners
of at
least 25% in principal amount of the senior debt securities of that
series;
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failure
to pay any sinking fund installment when
due;
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default
occurs under any bond, note, debenture or other instrument evidencing
any
indebtedness for money borrowed by us, excluding any of our subsidiaries
(including a default with respect to any other series of senior debt
securities issued under the senior indenture), or under any mortgage,
indenture or other instrument under which there may be issued or
by which
there may be secured or evidenced any indebtedness for money borrowed
by
us (or the payment of which is guaranteed by us), excluding any of
our
subsidiaries, whether such indebtedness or guarantee exists on the
date of
the senior indenture or is issued or entered into following the date
of
the senior indenture, if:
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such
default results from failure to pay any such indebtedness when due;
or
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as
a result of such default the maturity of such indebtedness has been
accelerated prior to its expressed maturity;
and
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the
principal amount of such indebtedness, together with the principal
amount
of any other such indebtedness in default for failure to pay any
such
indebtedness when due or the maturity of which has been so accelerated,
aggregates at least $40 million;
and
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certain
events of bankruptcy, insolvency, reorganization, receivership or
liquidation relating to us. (See section 501 of the senior
indenture.)
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An
event
of default regarding a particular series of senior debt securities does not
necessarily constitute an event of default for any other series of senior debt
securities.
We
will
be required to file annually with the senior indenture trustee an officers’
certificate as to the absence of default in performance of certain covenants
in
the senior indenture. (See section 1008 of the senior indenture.) The senior
indenture provides that the senior indenture trustee may withhold notice to
the
holders of the senior debt securities of any default, except in payment of
principal of, or premium, if any, or interest on, those securities or in the
payment of any sinking fund installment with respect to those securities, if
the
senior indenture trustee in good faith determines that it is in the interest
of
the holders of those securities to do so. (See section 602 of the senior
indenture.)
The
senior indenture provides that, if an event of default with respect to the
senior debt securities specified therein shall have happened and be continuing,
either the senior indenture trustee or the holders of 25% or more in aggregate
principal amount of the senior debt securities may declare the principal amount
of all the senior debt securities to be due and payable immediately. However,
if
we shall cure all defaults and certain other conditions are met, such
declaration may be annulled and past defaults may be waived by the holders
of a
majority in aggregate principal amount of the senior debt securities. (See
section 502 of the senior indenture.)
Subject
to the provisions of the senior indenture relating to the duties of the senior
indenture trustee, the senior indenture trustee will be under no obligation
to
exercise any of its rights or powers under the senior indenture at the request
or direction of any of the holders of the senior debt securities, unless those
holders shall have offered to the senior indenture trustee reasonable indemnity.
(See section 603 of the senior indenture.)
Subject
to the provision for indemnification, the holders of a majority in principal
amount of the senior debt securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
senior indenture trustee, or exercising any trust or power conferred on the
senior indenture trustee with respect to the senior debt securities. However,
the senior indenture trustee shall have the right to decline to follow any
direction if that trustee shall determine that the action so directed conflicts
with any law or the provisions of the senior indenture or if that trustee shall
determine that the action so directed would be prejudicial to holders not taking
part in the direction. (See section 512 of the senior indenture.)
Defeasance
The
senior indenture provides that, with respect to a particular series of senior
debt securities, we may elect either (a) to be discharged from all of our
obligations with respect to the senior debt securities of any series, except
for
obligations to register the transfer or exchange of senior debt securities,
replace stolen, lost or mutilated senior debt securities, to maintain paying
agencies and to hold moneys for payment in trust which we refer to as
“defeasance,”
or
(b)
to be released from our obligations under sections of the senior indenture
described under “—Consolidation,
Merger, Conveyance, Sale or Transfer”
and
“—
Limitation
on Secured Debt”
or
to
certain covenants relating to corporate existence and maintenance of properties
and insurance, in each case, which we refer to as “covenant
defeasance,”
if:
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we
deposit with the senior indenture trustee, in trust, money, or in
certain
cases, U.S. government obligations sufficient to pay and discharge
(i) the
principal of, and premium, if any, and interest, if any, on the
outstanding senior debt securities on the dates such payments are
due, in
accordance with the terms of those securities and (ii) any mandatory
sinking fund payments applicable to the senior debt securities on
the day
on which payments are due and payable in accordance with the terms
of the
senior indenture and of those
securities;
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no
event of default or event which with notice or lapse of time would
become
an event of default, including by reason of such deposit, with respect
to
the senior debt securities shall have occurred and be continuing
on the
date of such deposit;
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we
deliver to the senior indenture trustee an opinion of counsel to
the
effect that the holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance
of
certain obligations; and
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we
have delivered to the senior indenture trustee an officers’ certificate
and an opinion of counsel, each stating that all conditions precedent
provided for in the senior indenture relating to the satisfaction
and
discharge of the senior debt securities have been complied with.
(See
sections 403 and 1009 of the senior
indenture.)
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Discharged
means, with respect to the senior debt securities of any series, the discharge
of the entire indebtedness represented by, and our obligations under, the senior
debt securities of such series and in the satisfaction of all of our obligations
under the senior indenture relating to the senior debt securities of such
series, except (a) the rights of holders of the senior debt securities of such
series to receive, from the trust fund established pursuant to the senior
indenture, payment of the principal of and interest and premium, if any, on
the
senior debt securities of such series when such payments are due, (b) our
obligations with respect to the senior debt securities of such series with
respect to registration, transfer, exchange and maintenance of a place of
payment and (c) the rights, powers, trusts, duties, protections and immunities
of the senior indenture trustee under the senior indenture. (See section 101
of
the senior indenture.)
If
we
have deposited or caused to be deposited money or U.S. government obligations
to
pay or discharge the principal of, and premium, if any, and interest, if any,
on
the outstanding senior debt securities to and including a redemption date on
which all of the outstanding senior debt securities are to be redeemed, such
redemption date shall be irrevocably designated by a board of directors
resolution delivered to the senior indenture trustee on or prior to the date
of
deposit of such money or U.S. government obligations, and such board of
directors resolution shall be accompanied by an irrevocable company request
that
the senior indenture trustee give notice of such redemption in our name and
at
our expense not less than 30 nor more than 60 days prior to such redemption
date
in accordance with the senior indenture. (See section 403 of the senior
indenture.)
U.S.
government obligations means direct obligations of the United States for the
payment of which its full faith and credit is pledged, or obligations of a
person controlled or supervised by and acting as an agency or instrumentality
of
the United States and the payment of which is unconditionally guaranteed by
the
United States. U.S. government obligations shall also include a depositary
receipt issued by a bank or trust company as custodian with respect to any
such
U.S. government obligation or a specific payment of interest on or principal
of
any such U.S. government obligation held by such custodian for the account
of a
holder of a depositary receipt. However, except as required by law, such
custodian is not authorized to make any deduction from the amount payable to
the
holder of such depositary receipt from any amount received by the custodian
in
respect of the U.S. government obligation or the specific payment of interest
on
or principal of the U.S. government obligation evidenced by such depositary
receipt. (See section 101 of the senior indenture.)
Resignation
or Removal of Senior Indenture Trustee
The
senior indenture trustee may resign at any time by giving written notice to
us
specifying the day upon which the resignation is to take effect. The resignation
will take effect immediately upon the later of the appointment of a successor
senior indenture trustee and such specified day. (See section 610 of the senior
indenture.)
The
senior indenture trustee may be removed at any time by an instrument or
concurrent instruments in writing delivered to the senior indenture trustee
and
us and signed by the holders, or their attorneys-in-fact, representing at least
a majority in principal amount of the then outstanding senior debt securities.
In addition, under certain circumstances, we may remove the senior indenture
trustee upon notice to the holder of each senior debt security outstanding
and
the senior indenture trustee, and appointment of a successor senior indenture
trustee. (See section 610 of the senior indenture.)
Concerning
the Senior Indenture Trustee
JPMorgan
Chase Bank is the trustee under the senior indenture and the subordinated
indenture. JPMorgan Chase Bank also serves as the property trustee and the
guarantee trustee relating to trust preferred securities previously issued
by
Energy East Capital Trust I, as well as the trustee under the first mortgage
bond indenture with respect to the first mortgage bonds and trustee under the
unsecured debt indenture with respect to senior unsecured debt securities issued
by our subsidiary, NYSEG. We maintain other banking relationships in the
ordinary course of business with the senior indenture trustee and its
affiliates.
Governing
Law
The
senior indenture and the senior debt securities will be governed by and
construed in accordance with the laws of the State of New York.
Junior
Subordinated Debt Securities
The
following description sets forth the general terms and provisions of the junior
subordinated debt securities that we may offer by this prospectus. The junior
subordinated debt securities will be unsecured and subordinate and junior in
right of payment to all of our senior debt securities as provided in the
subordinated indenture.
The
junior subordinated debt securities will be issued under a subordinated
indenture between us and JPMorgan Chase Bank, as trustee. The subordinated
indenture is an exhibit to the registration statement, of which this prospectus
forms a part, and is incorporated by reference.
The
subordinated indenture contains the full text of the matters described in this
section. Because this section is a summary, it does not describe certain
exceptions and qualifications contained in the subordinated indenture or the
junior subordinated debt securities. This summary is subject to and qualified
in
its entirety by reference to all the provisions of the subordinated indenture,
including definitions of terms used in that indenture. We also include
references in parentheses to certain sections of the subordinated indenture.
Whenever we refer to particular sections of, or defined terms used in, the
subordinated indenture in this prospectus or in the applicable prospectus
supplement, these sections or defined terms are incorporated by reference herein
or in the prospectus supplement. This summary also is subject to and qualified
by reference to the description of the particular terms of the junior
subordinated debt securities described in the applicable prospectus supplement
or supplements.
Prospective
purchasers of junior subordinated debt securities should be aware that such
securities may be sold at a substantial discount below their stated principal
amount and may bear no interest or below market rate interest. In addition,
special U.S. federal income tax, accounting and other considerations may be
applicable to any junior subordinated debt securities. The applicable prospectus
supplement will describe these considerations, if they apply.
General
The
junior subordinated debt securities may be issued in one or more series under
the subordinated indenture with terms corresponding to the terms of a series
of
related trust preferred securities. In that event, concurrently with the
issuance and sale of a particular trust preferred security, the trust will
invest the proceeds of such sale, and the consideration paid by us for the
trust’s common securities, in the related series of junior subordinated debt
securities. Each series of junior subordinated debt securities held by a
particular trust will be in an aggregate principal amount equal to the aggregate
stated liquidation amount of the trust preferred securities and common
securities.
Because
we are a holding company, our rights and the rights of our creditors, including
the rights of the holders of our junior subordinated debt securities, to
participate in any distribution of assets of any of our subsidiaries when such
subsidiary is liquidated or reorganized are subject to the prior claims of
the
subsidiary’s creditors. Accordingly, the junior subordinated debt securities
will be effectively subordinated to all existing and future liabilities of
our
subsidiaries, and the trust, as holder of junior subordinated debt securities,
should look only to our assets for payments on the junior subordinated debt
securities.
The
subordinated indenture does not limit the aggregate principal amount of junior
subordinated debt securities that we may issue under that indenture. The
subordinated indenture provides that the junior subordinated debt securities
may
be issued in one or more series pursuant to a supplemental indenture or a board
resolution and officers’ certificates.
We
refer
you to the applicable prospectus supplement for a description of the following
terms of the junior subordinated debt securities, including the method for
determining such terms, the persons authorized to determine such terms and
the
limits, if any, within which any such determination of such terms is to be
made:
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any
limit on the aggregate principal
amount;
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the
maturity date on which principal is
payable;
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the
interest rate or rates and date or dates from which interest shall
accrue;
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the
interest payment dates;
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the
record dates for each corresponding interest payment
date;
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our
right to defer or extend an interest payment
date;
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the
place where (i) principal, any premium and any interest are payable,
(ii)
junior subordinated debt securities may be presented for registration
of
transfer or exchange, and (iii) notices and demands to us may be
made;
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the
terms and conditions of redemption;
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issuable
denominations;
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the
portion (if less than all) of the principal amount payable upon
acceleration of maturity;
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the
currency or currencies in which the principal, any premium and any
interest are payable or in which the junior subordinated debt securities
will be denominated;
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any
additions, modifications or deletions to the events of default or
covenants in the subordinated
indenture;
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the
index or indices and applicable calculations used to determine the
amount
of principal, premium, if any, or interest
payments;
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the
terms and conditions for issuance of a temporary global security
representing all such junior subordinated debt securities and the
exchange
of a temporary global security for definitive junior subordinated
debt
securities;
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whether
issuance will be in the form of one or more global securities and
the
depositary for global securities;
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appointment
of any paying agent or agents;
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the
form of trust agreement and guarantee;
and
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any
other terms not inconsistent with the subordinated
indenture.
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If
(i)
the purchase price of any of the junior subordinated debt securities is payable
in one or more foreign currencies or currency units, (ii) any junior
subordinated debt securities are denominated in one or more foreign currencies
or currency units or (iii) the principal, any premium or any interest on any
junior subordinated debt securities is payable in one or more foreign currencies
or currency units, then the restrictions, elections, certain U.S. federal income
tax consequences, specific terms and other information with respect to such
series of junior subordinated debt securities and such foreign currency or
currency units will be set forth in the applicable prospectus
supplement.
If
any
index is used to determine the amount of payments of principal, any premium
or
any interest on any series of junior subordinated debt securities, special
U.S.
federal income tax, accounting and other applicable considerations will be
described in the applicable prospectus supplement.
Denominations,
Registration and Transfer
The
junior subordinated debt securities will be issuable only in registered form
without coupons, unless we indicate differently in the applicable prospectus
supplement. Junior subordinated debt securities of any series will be
exchangeable for other junior subordinated debt securities of the same series,
in authorized denominations, with the same aggregate principal amount, original
issue date and maturity and bearing the same interest rate. (See
sections 2.3 and 2.5 of the subordinated indenture.)
If
a
redemption occurs, neither we nor the subordinated indenture trustee will be
required to (i) exchange or register the transfer of junior subordinated debt
securities of any series during a period beginning at the opening of business
15
days before the mailing of a notice of redemption of junior subordinated debt
securities of that series and ending at the close of business on the relevant
redemption date or (ii) exchange or transfer any junior subordinated debt
securities so selected for redemption, except any portion of junior subordinated
debt securities not being redeemed in a partial redemption. (See section 2.5
of
the subordinated indenture.)
Global
Junior Subordinated Debt Securities
Unless
we
indicate differently in the applicable prospectus supplement, all or a part
of
each series of junior subordinated debt securities may be issued in the form
of
one or more global junior subordinated debt securities that will be deposited
with, or on behalf of, a depositary identified in the applicable prospectus
supplement. Global junior subordinated debt securities will be issued only
in
fully registered form, but may be in either temporary or permanent form. Unless
and until it is exchanged for certificated junior subordinated debt securities,
a global junior subordinated debt security may be transferred only as a whole.
Transfers of global junior subordinated debt securities are permitted between
the following entities:
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by
the depositary for such global junior subordinated debt security
to a
nominee of such depositary;
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by
a nominee of such depositary to such depositary or another nominee
of such
depositary; or
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by
the depositary or any nominee to a successor depositary or any nominee
of
such successor. (See section 2.5 of the subordinated
indenture.)
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Each
prospectus supplement will describe the terms of the depositary arrangement
with
respect to each series of junior subordinated debt securities.
Payment
and Paying Agents
Payment
of principal, any premium and any interest on junior subordinated debt
securities will be made at the office of the subordinated indenture trustee
in
the City of New York or at the office of such paying agent(s) as we may
periodically designate, unless we indicate differently in the applicable
prospectus supplement. However, at our option, payment of any interest may
be
made (i) except in the case of global junior subordinated debt securities,
by
check mailed to the address in the securities register of the person entitled
to
such payment or (ii) by transfer to an account specified in the securities
register maintained by the person entitled to such payment, provided that proper
transfer instructions have been received by the preceding record date. Unless
we
indicate differently in the applicable prospectus supplement, payment of any
interest on junior subordinated debt securities will be made to the person
in
whose name such junior subordinated debt securities are registered at the close
of business on the record date for such interest, except in the case of
defaulted interest. We may at any time designate additional paying agents or
rescind the designation of any paying agent; however, we will at all times
be
required to maintain a paying agent in each place of payment for each series
of
junior subordinated debt securities. (See sections 4.1 and 4.2 of the
subordinated indenture.)
Any
moneys deposited with the subordinated indenture trustee or any paying agent
in
trust for the payment of principal, any premium or any interest on any junior
subordinated debt security and remaining unclaimed for two years after such
payment has become due and payable shall, at our request, be repaid to us.
After
that time, the holder of such junior subordinated debt security will be a
general unsecured creditor of ours and may only look to us for payment of such
moneys. (See section 12.4 of the subordinated indenture.)
Option
to Defer Interest Payments
If
provided in the applicable prospectus supplement, we will have the right to
periodically defer payment of interest for an extension period of up to the
number of consecutive interest payment periods specified in the applicable
prospectus supplement. The interest payment deferment will be subject to the
terms, conditions and any covenants specified in the applicable prospectus
supplement. The extension period may not extend beyond the maturity of such
series of junior subordinated debt securities as provided in the applicable
prospectus supplement. (See section 2.10 of the subordinated indenture.) Certain
U.S. federal income tax consequences and other applicable considerations to
any
such junior subordinated debt securities will be described in the applicable
prospectus supplement.
Redemption
and Prepayment
The
junior subordinated debt securities will not be subject to any sinking fund,
unless we indicate differently in the applicable prospectus
supplement.
We
may
redeem all (at any time) or a part (at particular times) of the junior
subordinated debt securities of any series, unless we indicate differently
in
the applicable prospectus supplement. If the junior subordinated debt securities
of any series are redeemable beginning on a specified date or upon the
satisfaction of additional conditions, the applicable prospectus supplement
will
specify such date or describe such conditions. The redemption price for any
junior subordinated debt security so redeemed will equal any accrued and unpaid
interest to the redemption date, plus 100% of the outstanding principal amount,
unless we indicate differently in the applicable prospectus
supplement.
Unless
we
indicate differently in the applicable prospectus supplement, if a Special
Event
(as defined in “Description
of Trust Preferred Securities—Special Event Redemption”)
regarding a particular trust occurs and is continuing, we have the option to
prepay all (but not a part) of the corresponding series of junior subordinated
debt securities held by the trust at any time within 90 days of the date of
such
Special Event, subject to the provisions of the subordinated indenture and
whether or not such junior subordinated debt securities are then otherwise
redeemable at our option. The prepayment price for such junior subordinated
debt
securities will be described in the applicable prospectus supplement. For so
long as the trust is the holder of all the outstanding junior subordinated
debt
securities of such series, the proceeds of any such prepayment will be used
by
the trust to redeem its trust securities in accordance with their
terms.
Notice
of
any redemption will be mailed at least 20 days but not more than 60 days before
the redemption date to each holder of junior subordinated debt securities to
be
redeemed at its registered address. Unless we default in payment of the
redemption price and any interest accrued to the redemption date, interest
will
stop accruing on such junior subordinated debt securities (or the part called
for redemption) as of the redemption date. (See sections 3.2 and 3.3 of the
subordinated indenture.)
Option
to Change or Extend Maturity Date
If
provided in the applicable prospectus supplement, we will have the right
to:
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shorten
the maturity of the junior subordinated debt securities of any series
at
any time to a date no earlier than the first date on which we may
redeem
those securities; or
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extend
the maturity of the junior subordinated debt securities of any series
at
any time to a date no later than the forty-ninth anniversary of the
first
interest payment date following the original issue date of those
securities.
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Our
right
to shorten or extend the maturity of a particular series of junior subordinated
debt securities will be subject to the terms, conditions and any covenants
specified in the applicable prospectus supplement. (See section 2.12 of the
subordinated indenture.)
Restrictions
on Certain Payments
We
will
covenant that we will not, and will not permit any of our subsidiaries
to:
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declare
or pay any dividends or distributions on, or redeem, purchase, acquire
or
make a liquidation payment with respect to, any of our capital
stock,
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make
any payment of principal, any premium or any interest on or repay,
repurchase or redeem any of our debt securities (including other
series of
junior subordinated debt securities) that rank equally with or junior
in
interest to the junior subordinated debt securities,
or
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make
any guarantee payments on any guarantee by us of the debt securities
of
any subsidiary if the guarantee ranks equally with or junior in interest
to the junior subordinated debt
securities
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whenever
any of the following payment restriction events occur:
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we
have actual knowledge of the occurrence of any event (i) that with
the
giving of notice or the lapse of time or both would constitute an
event of
default under the subordinated indenture with respect to the junior
subordinated debt securities of any series and (ii) that we have
not taken
reasonable steps to cure,
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if
such junior subordinated debt securities are held by a trust of a
series
of related trust preferred securities and we have defaulted on the
payment
of any obligations under the guarantee relating to such related trust
preferred securities, or
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we
have given notice of our election of an extension period as provided
in
the subordinated indenture with respect to the junior subordinated
debt
securities of such series and have not rescinded such notice, or
such
extension period, or any extension thereof, is
continuing.
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We
will
be permitted to make:
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dividends
or distributions in our common
stock,
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any
declaration of a dividend in connection with the implementation of
a
shareholders’ rights plan, or the issuance of capital stock under any such
plan in the future, or the redemption or repurchase of any such rights
pursuant to such plan,
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payments
under any guarantee with respect to the series of related trust preferred
securities, and
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purchases
of common stock related to the issuance of common stock under any
of our
benefit plans for our directors, officers or employees or our dividend
reinvestment plan. (See section 4.9 of the subordinated
indenture.)
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Modification
of Subordinated Indenture
We
and
the subordinated indenture trustee may modify the subordinated indenture without
the consent of the holders of any series of junior subordinated debt securities
or, if the trust is the holder of any series of junior subordinated debt
securities, the holders of the related trust preferred securities, to cure
ambiguities, defects or inconsistencies (so long as the interests of the holders
of the junior subordinated debt securities or, if the trust is the holder of
any
series of junior subordinated debt securities, the holders of the related trust
preferred securities, are not materially adversely affected) and qualify, or
maintain the qualification of, the subordinated indenture under the Trust
Indenture Act of 1939, among other things. (See section 10.1 of the subordinated
indenture.)
We
and
the subordinated indenture trustee may execute any supplemental indenture to
create any new series of junior subordinated debt securities without the consent
of any holders of junior subordinated debt securities. (See section 10.1 of
the
subordinated indenture.)
The
subordinated indenture permits us and the subordinated indenture trustee to
modify the subordinated indenture in a manner that materially adversely affects
the rights of holders of a series of junior subordinated debt securities so
long
as the holders of at least a majority in principal amount of such series of
junior subordinated debt securities consents. The consent of all affected
holders of a series of junior subordinated debt securities is required to,
among
other things: (i) change the maturity of such series of junior subordinated
debt
securities; (ii) reduce the principal amount of, or reduce the rate or extend
the time of payment of interest on, such series of junior subordinated debt
securities; or (iii) modify the provisions regarding subordination of the junior
subordinated debt securities in a manner that adversely affects the rights
of
holders of such series of junior subordinated debt securities. The consent
of
all holders of a series of junior subordinated debt securities is required
to
reduce the percentage of principal amount of junior subordinated debt securities
of such series, the holders of which are required to consent to any such
modification of the subordinated indenture. (See section 10.2 of the
subordinated indenture.)
If
the
trust is the holder of any series of junior subordinated debt securities, so
long as any related trust preferred securities remain outstanding, unless the
principal and any premium of the junior subordinated debt securities and all
accrued and unpaid interest on such junior subordinated debt securities have
been paid in full: (i) no modification may be made that materially adversely
affects a holder of the trust preferred securities, and no termination of the
subordinated indenture may occur, and no waiver of any event of default under
the subordinated indenture or compliance with any covenant under the
subordinated indenture with respect to such junior subordinated debt securities
may be effective, without the prior consent of the holders of at least a
majority of the liquidation amount of all outstanding related trust preferred
securities affected; and (ii) no modification may impair the rights of a holder
of trust preferred securities to institute suit directly against us when certain
events of default occur under the subordinated indenture, without the prior
consent of the holders of all related trust preferred securities then
outstanding. (See section 10.2 of the subordinated indenture.)
Junior
Subordinated Debt Security Events of Default
An
“event
of default” will occur under the subordinated indenture if any of the following
events occurs:
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failure
for 30 days by us to pay any interest when due (subject to the deferral
of
any due date in the case of an extension period under the subordinated
indenture); or
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failure
by us to pay any principal when due at maturity, upon redemption,
by
declaration or otherwise; or
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failure
by us to observe or perform any other covenant contained in the junior
subordinated debt securities or the subordinated indenture (other
than
those specifically relating to another series) for 60 days after
written
notice to us from the subordinated indenture trustee or the holders
of at
least 25% in principal amount of such series of junior subordinated
debt
securities; or
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certain
events of bankruptcy, insolvency or reorganization by us. (See section
6.1
of the subordinated indenture.)
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The
applicable prospectus supplement will describe any other events of default
relating to the junior subordinated debt securities. The holders of a majority
of the outstanding principal amount of junior subordinated debt securities
of
each series affected have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the subordinated indenture
trustee. (See section 6.6 of the subordinated indenture.)
The
subordinated indenture trustee or the holders of at least 25% of the outstanding
principal amount of junior subordinated debt securities of each series affected
may declare the principal due and payable immediately when an event of default
under the subordinated indenture occurs. If the subordinated indenture trustee
or holders of at least 25% of the outstanding principal amount of junior
subordinated debt securities fail to make such declaration, the holders of
at
least 25% of the liquidation amount of the related trust preferred securities
will have such right. If the event of default under the subordinated indenture
has been cured, the holders of a majority of the outstanding principal amount
of
junior subordinated debt securities of each series affected may annul such
declaration. If the holders of such junior subordinated debt securities fail
to
annul such declaration and waive such default, the holders of a majority of
the
liquidation amount of the related trust preferred securities affected will
have
such right. (See section 6.1 of the subordinated indenture.)
The
holders of a majority of the outstanding principal amount of each series of
the
junior subordinated debt securities affected, and the holders of a majority
of
the liquidation amount of the corresponding trust preferred securities, may,
on
behalf of the holders of all the junior subordinated debt securities of such
series or the corresponding trust preferred securities (as applicable), waive
any default, except a default in the payment of principal or interest or a
default regarding a covenant or provision which under the subordinated indenture
cannot be modified or amended without the consent of the holder of each
outstanding junior subordinated debt security. We are required to file an annual
certificate with the subordinated indenture trustee stating whether we are
in
compliance with all the applicable conditions and covenants under the
subordinated indenture. (See sections 5.3 and 6.6 of the subordinated
indenture.)
Enforcement
of Certain Rights by Holders of Trust Preferred Securities
If
an
event of default under the subordinated indenture relating to the failure to
pay
interest or principal on a series of junior subordinated debt securities has
occurred and is continuing, a holder of related trust preferred securities
may
institute a suit directly against us to enforce payment of the principal or
interest on such junior subordinated debt securities having a principal amount
equal to the liquidation amount of the related trust preferred securities.
We
may not amend the subordinated indenture to remove this right to bring such
suit
without the prior written consent of the holders of all of the outstanding
trust
preferred securities. If the right to bring such suit is removed, the trust
may
become subject to the reporting obligations of the Securities Exchange Act
of
1934. We will have the right under the subordinated indenture to set-off any
payment made to you as a holder of trust preferred securities in connection
with
a suit directly against us or under the related guarantee. (See sections 2.11,
6.4 and 6.5 of the subordinated indenture.)
Holders
of trust preferred securities will not be able to directly exercise any remedies
other than those described in the preceding paragraph available to the trust
as
holder of the junior subordinated debt securities unless there has been an
event
of default under the amended trust agreement. (See “Description
of Trust Preferred Securities—Trust Enforcement Events.”)
Consolidation,
Merger, Sale of Assets and Other Transactions
The
subordinated indenture permits us to consolidate or merge with another person
or
to sell or convey all or substantially all its assets to any person
if:
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either
(i) we are the successor person or (ii) the successor person is organized
under the laws of the United States or any state or the District
of
Columbia, and such successor person expressly assumes our obligations
on
the junior subordinated debt securities and under the subordinated
indenture;
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immediately
after the consolidation, merger, sale or conveyance, no default in
the
performance of any covenant or condition under the subordinated indenture
has occurred; and
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in
the case the trust is the holder of any series of junior subordinated
debt
securities, such consolidation, merger, sale or conveyance is permitted
and does not cause a breach or violation under the related trust
agreement
and guarantee. (See section 11.1 of the subordinated
indenture.)
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The
general provisions of the subordinated indenture do not afford the trust, as
holder of the junior subordinated debt securities, protection in the event
of a
transaction involving us that may adversely affect holders of the junior
subordinated debt securities.
Satisfaction
and Discharge
The
subordinated indenture will cease to be of further effect when:
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all
outstanding junior subordinated debt securities are delivered to
the
subordinated indenture trustee for cancellation
or
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all
outstanding junior subordinated debt securities are due and payable
or
will become due and payable or will be called for redemption within
one
year, and we deposit with the subordinated indenture trustee funds
in
trust in an amount sufficient to pay at maturity or upon redemption
all of
such outstanding junior subordinated debt securities, including principal
and any interest to the date of maturity or redemption (as applicable)
and
we have paid all other amounts payable under the subordinated indenture.
(See section 12.1 of the subordinated
indenture.)
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The
following rights will survive such satisfaction and discharge:
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remaining
rights of registration of transfer, substitution and exchange and
our
optional redemption right,
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rights
of holders to receive principal and interest and other amounts deposited
with the subordinated indenture trustee,
and
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the
rights, obligations and immunities of the subordinated indenture
trustee
under the subordinated indenture. (See sections 7.6 and 12.1 of the
subordinated indenture.)
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Subordination
In
the
subordinated indenture, we have covenanted and agreed that any junior
subordinated debt securities will be subordinate and junior in right of payment
to all Senior Debt, as defined below. When any payment or distribution of our
assets is made due to any insolvency event of ours, the holders of Senior Debt
will first be entitled to receive payment in full of principal, any premium
and
any interest on such Senior Debt before any payment of principal or interest
on
the junior subordinated debt securities. (See section 14.1 of the subordinated
indenture.)
If
the
maturity of any junior subordinated debt securities is accelerated, the holders
of all outstanding Senior Debt will first be entitled to receive payment in
full
of all amounts due on such Senior Debt before the holders of junior subordinated
debt securities will be entitled to receive or retain any payment regarding
principal or interest on the junior subordinated debt securities. No payments
on
account of principal, any premium or any interest on the junior subordinated
debt securities may be made if a default in any payment with respect to Senior
Debt has occurred and is continuing or an event of default with respect to
any
Senior Debt resulting in its acceleration, or if any judicial proceeding is
pending with respect to any such default. (See sections 14.1 and 14.9 of the
subordinated indenture.)
“Senior
Debt,”
for
purposes of this section, means:
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any
indebtedness of ours for borrowed or purchased money, whether or
not
evidenced by bonds, debentures, notes or other written
instruments;
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obligations
of ours for reimbursement under letters of credit, banker’s acceptances,
security purchase facilities or similar facilities issued for our
account;
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any
indebtedness or other obligations of ours with respect to commodity
contracts, interest rate commodity and currency swap agreements,
cap,
floor and collar agreements, currency spot and forward contracts,
and
other similar agreements or arrangements;
and
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any
guarantees, endorsements (other than by endorsement of negotiable
instruments for collection in the ordinary course of business) or
other
similar contingent obligations in respect of obligations of others
of a
type described above, whether or not such obligation is classified
as a
liability on a balance sheet prepared in accordance with generally
accepted accounting principles;
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in
each
case above whether outstanding on the date of execution of the subordinated
indenture or thereafter incurred, other than obligations ranking on a parity
with the subordinated debt securities or ranking junior to the subordinated debt
securities. Senior Debt, for purposes of this section, does not include (a)
obligations to trade creditors or (b) any indebtedness of ours to any of our
subsidiaries.
The
subordinated indenture places no limitation on the amount of Senior Debt that
we
may incur. We expect to periodically incur additional indebtedness and other
obligations constituting Senior Debt.
Senior
Debt will be entitled to the benefits of the subordination provisions in the
subordinated indenture irrespective of the amendment, modification or waiver
of
any terms of the Senior Debt. We may not amend the subordinated indenture to
change the subordination of any outstanding junior subordinated debt securities
without the consent of each holder of Senior Debt that the amendment would
adversely affect.
The
subordinated indenture provides that the foregoing subordination provisions
may
be changed before issuance with respect to the junior subordinated debt
securities to be issued. Any such change would be described in the applicable
prospectus supplement.
Rights
of Holders of Trust Preferred Securities
As
a
holder of the related trust preferred securities for a series of junior
subordinated debt securities, you will have the rights, in connection with
modifications to the subordinated indenture or when events of default under
the
subordinated indenture occur, as described under “—Modification
of Subordinated Indenture,”
“—Junior
Subordinated Debt Security Events of Default”
and
“—Enforcement
of Certain Rights by Holders of Trust Preferred Securities,”
unless
we indicate differently in the applicable prospectus supplement.
We
will
covenant, as to each series of such junior subordinated debt
securities:
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to
maintain directly or indirectly 100% ownership of the trust common
securities of the trust to which such junior subordinated debt securities
have been issued, provided that certain successors which are permitted
pursuant to the subordinated indenture may succeed to our ownership
of the
trust common securities,
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not
to voluntarily terminate, wind up or liquidate the trust, except
(a) in
connection with a prepayment in full or a distribution of junior
subordinated debt securities to you as a holder of the trust preferred
securities in exchange for trust preferred securities on liquidation
of
the trust, or (b) in connection with certain mergers, consolidations
or
amalgamations permitted by the trust agreement,
and
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to
use our reasonable efforts, consistent with the terms and provisions
of
the trust agreement, to cause the trust to remain classified as a
grantor
trust and not as an association taxable as a corporation for U.S.
federal
income tax purposes. (See section 4.9 of the subordinated
indenture.)
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Trust
Expenses
Pursuant
to the subordinated indenture, we have agreed to pay all debts and other
obligations (other than with respect to the trust preferred securities) and
all
costs and expenses of the trust for any related trust preferred securities
(including costs and expenses relating to the organization of the trust, the
fees and expenses of the trustees of the trust and the costs and expenses
relating to the operation of the trust) and the offering of the trust preferred
securities and to pay any and all taxes and all related costs and expenses
(other than U.S. federal withholding taxes) to which the trust might become
subject.
Concerning
the Subordinated Indenture Trustee
The
subordinated indenture trustee will have all the duties and responsibilities
specified with respect to a subordinated indenture trustee under the Trust
Indenture Act. Subject to the provisions of the Trust Indenture Act, the
subordinated indenture trustee is not under any obligation to exercise any
of
the powers vested in it by the subordinated indenture at the request of any
holder of junior subordinated debt securities, unless it is offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might
be incurred. The subordinated indenture trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the subordinated indenture trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to
it.
JPMorgan
Chase Bank is the trustee under the senior indenture and the subordinated
indenture. JPMorgan Chase Bank also serves as the property trustee and the
guarantee trustee relating to trust preferred securities previously issued
by
Energy East Capital Trust I, as well as the trustee under the first mortgage
bond indenture with respect to the first mortgage bonds and trustee under the
unsecured debt indenture with respect to senior unsecured debt securities issued
by our subsidiary, NYSEG. We maintain other banking relationships in the
ordinary course of business with the subordinated indenture trustee and its
affiliates.
Governing
Law
The
subordinated indenture is, and the junior subordinated debt securities will
be,
governed by and construed in accordance with the laws of the State of New
York.
Trust
Preferred Securities
The
following is a summary of the principal terms of the trust preferred securities.
The form of amended trust agreement for the trust is filed as an exhibit to
the
registration statement, of which this prospectus forms a part, and is
incorporated by reference. The terms of the trust preferred securities will
include those stated in the amended trust agreement relating to the trust and
those made part of such amended trust agreement by the Trust Indenture Act
and
the Delaware Statutory Trust Act.
General
The
trust
may issue only one series of trust preferred securities and will exist until
terminated as provided in its amended trust agreement. Except under certain
circumstances, we will be entitled to appoint, remove, or replace the trustees
for the trust, who will conduct the business and affairs of the trust. The
trustees of the trust will consist of:
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two
of our employees, officers or affiliates acting as administrative
trustees;
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JPMorgan
Chase Bank will act as property trustee and as indenture trustee
for
purposes of the Trust Indenture Act, under the terms set forth in
the
applicable prospectus supplement;
and
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one
trustee with its principal place of business or who resides in the
State
of Delaware and who will act under the terms set forth in the applicable
prospectus supplement.
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The
amended trust agreement will authorize its administrative trustees to issue,
on
its behalf, two classes of trust securities¾preferred
securities and common securities¾each
of
which will have the terms described in this prospectus and in the applicable
prospectus supplement. We will own all of the trust common securities. The
trust
common securities will rank equally in right of payment, and payments will
be
made on trust common securities proportionately with the trust preferred
securities of the trust. However, if an event of default occurs and is
continuing under the trust’s amended trust agreement, the rights of the holders
of the trust’s common securities to payment for distributions and payments upon
liquidation, redemption and otherwise, will be subordinated to the rights of
the
holders of the trust preferred securities. We will acquire, directly or
indirectly, trust common securities in a total liquidation amount of
approximately 3% of the total capital of the trust.
The
proceeds from the sale of the trust’s securities will be used by the trust to
purchase our junior subordinated debt securities. These junior subordinated
debt
securities will be held in trust by the property trustee, for the benefit of
the
trust and the holders of the trust’s securities. We will guarantee on a
subordinated basis the payments of distributions and payments on redemption
or
liquidation with respect to the trust preferred securities, but only to the
extent the trust has funds available to make those payments and has not made
the
payments. (See “Description
of the Guarantee.”)
The
assets available for distribution to the holders of the trust preferred
securities will be limited to payments from us under the related junior
subordinated debt securities held by the trust. If we fail to make a payment
on
the junior subordinated debt securities held by the trust, the trust will not
have sufficient funds to make related payments, including distributions, on
its
trust preferred securities. The guarantee, when taken together with our
obligations under the junior subordinated debt securities held by the trust,
the
subordinated indenture and the amended trust agreement relating to the trust,
will provide a full and unconditional guarantee of amounts due on the trust
preferred securities issued by the trust. (See “Relationship
Among the Trust Preferred Securities, the Guarantee and the Junior Subordinated
Debt Securities held by the Trust.”)
The
trust
preferred securities will have the terms, including distributions, redemption,
voting, liquidation rights and other preferred, deferred or other special rights
or restrictions that will be described in the amended trust agreement or made
part of the amended trust agreement by the Trust Indenture Act or the Delaware
Statutory Trust Act. The terms of the trust preferred securities will mirror
the
terms of the related junior subordinated debt securities held by the trust.
In
other words, the distribution rate and the distribution payment dates and other
payment dates for the trust preferred securities of the trust will correspond
to
the interest rate and interest payment dates and other payment dates for the
junior subordinated debt securities held by the trust. Holders of trust
preferred securities have no preemptive or similar rights.
Provisions
of a Particular Series
The
trust
may issue only one series of trust preferred securities. The prospectus
supplement will set forth the principal terms of the trust preferred securities
that will be offered, including:
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the
name of the trust preferred
securities;
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the
liquidation amount and number of trust preferred securities
issued;
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the
annual distribution rate(s) or method of determining such rate(s),
the
payment date(s) and the record dates used to determine the holders
who are
to receive distributions;
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the
date or dates from which distributions will be cumulative or the
method of
determining such date or dates;
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the
optional redemption provisions, if any, including the prices, time
periods
and other terms and conditions on which the trust preferred securities
will be purchased or redeemed, in whole or in
part;
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the
terms and conditions, if any, upon which the related junior subordinated
debt securities and guarantee may be distributed to holders of trust
preferred securities;
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whether
the trust preferred securities are to be issued in book-entry form
and
represented by one or more global certificates, and if so, the depositary
for those global certificates and the specific terms of the depositary
arrangements; and
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any
other relevant rights, preferences, privileges, limitations or
restrictions of the trust preferred securities. (See article 7 of
the
amended trust agreement.)
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The
interest rates and interest and other payment dates of the junior subordinated
debt securities issued to the trust will correspond to the rates at which
distributions will be paid and the respective distribution and other payment
dates of the trust preferred securities of the trust.
Extensions
We
have
the right under the subordinated indenture to defer payments of interest on
the
junior subordinated debt securities by extending the interest payment period
from time to time. The administrative trustees of the trust will give the
holders of its trust preferred securities notice of any extension period upon
their receipt of notice from us. If distributions are deferred, the deferred
distributions and accrued interest will be paid to holders of record of such
trust preferred securities as they appear on the books and records of the trust
on the record date next following the termination of such deferral period.
(See
“Description
of Junior Subordinated Debt Securities—Option To Defer Interest
Payments.”)
Distributions
Distributions
on the trust preferred securities will be made on the dates to be set forth
in
the amended trust agreement to the extent that the trust has funds available
for
the payment of distributions in the property account held by its property
trustee. The trust’s funds available for distribution to the holders of its
trust securities will be limited to payments received from us on the
corresponding junior subordinated debt securities. We have guaranteed the
payment of distributions out of monies held by the trust to the extent set
forth
under “Description
of the Guarantee.”
Distributions
on the trust preferred securities will be payable to the holders named on its
securities register at the close of business on the relevant record dates,
which, as long as those trust preferred securities remain in global form, will
be one business day prior to the relevant payment dates. Such distributions
will
be paid through the property trustee for the trust, who will hold amounts
received in respect of the corresponding junior subordinated debt securities
in
the property account for the benefit of the holders of its trust securities.
In
the event that trust preferred securities do not continue to remain in global
form, the relevant record dates will conform to the rules of any securities
exchange on which those trust preferred securities are listed and, if none,
the
administrative trustees will have the right to select relevant record dates,
which will be more than 14 days but less than 60 days prior to the relevant
payment dates. In the event that any date on which distributions are to be
made
on trust preferred securities is not a business day, then payment of the
distributions payable on that date will be made on the next succeeding day
which
is a business day and without any interest or other payment in respect of that
delay, except that, if that business day is in the next succeeding calendar
year, the payment will be made on the immediately preceding business day, in
each case with the same force and effect as if made on such payment date. (See
section 7.2 of the amended trust agreement.)
Mandatory
Redemption of Trust Preferred Securities
The
trust
preferred securities will have no stated maturity date, but will be redeemed
upon the maturity of the related junior subordinated debt securities held by
the
trust or to the extent such junior subordinated debt securities are redeemed
prior to maturity. The junior subordinated debt securities will mature on the
date specified in the applicable prospectus supplement and may be redeemed
at
any time, in whole but not in part, in certain circumstances upon the occurrence
of a Tax Event or an Investment Company Event as described below under
“-Special
Event Redemption.”
Upon
the
repayment or redemption of the junior subordinated debt securities held by
the
trust, the proceeds of their repayment or redemption will simultaneously be
applied to redeem all the outstanding trust securities of the trust at the
redemption price. Upon the redemption of the junior subordinated debt securities
held by the trust, either at our option or as a result of a Tax Event or an
Investment Company Event, the proceeds from the redemption will simultaneously
be applied to redeem the trust securities of the trust having a total
liquidation amount equal to the total principal amount of such junior
subordinated debt securities so redeemed at the redemption price; provided,
that
holders of such trust securities will be given not less than 20 nor more than
60
days’ notice of the redemption. In the event that fewer than all of the
outstanding trust securities are to be redeemed, such trust securities will
be
redeemed proportionately. (See sections 7.3 and 7.4 of the amended trust
agreement.)
Special
Event Redemption
Both
a
Tax Event and an Investment Company Act Event constitute Special Events for
purposes of the redemption provisions described in the preceding
paragraph.
A
Tax
Event means that the administrative trustees of the trust have received an
opinion of independent tax counsel experienced in those matters to the effect
that, as a result of any amendment to, change or announced proposed change
in:
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the
laws or regulations of the United States or any of its political
subdivisions or taxing authorities,
or
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any
official administrative pronouncement, action or judicial decision
interpreting or applying those laws or
regulations,
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which
amendment or change becomes effective or proposed change, pronouncement, action
or decision is announced on or after the date the trust preferred securities
of
the trust are issued and sold, there is more than an insubstantial risk
that:
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the
trust is, or within 90 days would be, subject to U.S. federal income
tax
with respect to income accrued or received on the junior subordinated
debt
securities held by the trust,
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interest
payable to the trust on such junior subordinated debt securities
is not or
within 90 days would not be, deductible, in whole or in part, by
us for
U.S. federal income tax purposes,
or
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the
trust is, or within 90 days would be, subject to a material amount
of
other taxes, duties or other governmental
charges.
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An
Investment Company Event means that the administrative trustees of the trust
have received an opinion of a nationally recognized independent counsel to
the
effect that, as a result of an amendment to or change in the Investment Company
Act of 1940 or regulations thereunder on or after the date the trust preferred
securities of the trust are issued and sold, there is more than an insubstantial
risk that the trust is, or will be considered to be, an investment company
and
be required to be registered under the Investment Company Act.
Redemption
Procedures
The
trust
may not redeem fewer than all of its outstanding trust securities unless all
accrued and unpaid distributions have been paid on all of its trust securities
for all distribution periods terminating on or before the date of redemption.
In
the event that fewer than all of its outstanding trust securities are to be
redeemed, such trust securities will be redeemed proportionately.
If
the
trust gives a notice of redemption in respect of its trust preferred securities
represented in global form (which notice will be irrevocable), then, by 2:00
p.m., New York City time, on the redemption date, and so long as we have paid
to
the applicable property trustee a sufficient amount of cash in connection with
the related redemption or maturity of the junior subordinated debt securities
held by the trust, the property trustee will irrevocably deposit with the
depositary or its nominee funds sufficient to pay the redemption price and
will
give the depositary irrevocable instructions and authority to pay the redemption
price to the holders of the trust preferred securities. If the trust gives
a
notice of redemption in respect of its trust securities not represented in
global form, and so long as we have paid to the property trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
junior subordinated debt securities held by the trust, the paying agent will
pay
the redemption price to the holders of the trust preferred securities by check.
If notice of redemption has been given and funds deposited as required, then,
immediately prior to the close of business on the date of the deposit or
payment, distributions will cease to accrue and all rights of holders of trust
preferred securities called for redemption will cease, except the right of
the
holders of the trust preferred securities to receive the redemption price but
without interest on the redemption price. In the event that any date fixed
for
redemption of trust preferred securities is not a business day, then payment
of
the redemption price payable on that date will be made on the next succeeding
day that is a business day, without any interest or other payment in respect
of
any such delay, except that, if that business day falls in the next calendar
year, 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 is improperly withheld or refused and not paid either by the trust
or
by us under the guarantee, distributions on the trust preferred securities
will
continue to accrue at the then applicable rate from the original redemption
date
to the date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the redemption price.
Subject to the foregoing and applicable law, including, without limitation,
U.S.
federal securities laws, we or our 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. (See section 7.4 of the amended trust
agreement.)
Distribution
of the Junior Subordinated Debt Securities
We
will
have the right at any time to dissolve the trust and, after satisfaction of
the
liabilities of creditors of the trust to be dissolved as provided by applicable
law, to cause the junior subordinated debt securities held by the trust to
be
distributed to the holders of the trust preferred securities of the trust in
a
total stated principal amount equal to the total stated liquidation amount
of
the trust preferred securities then outstanding plus accumulated and unpaid
distributions. Prior to any such dissolution, we will obtain any required
regulatory approvals. The right to dissolve the trust and distribute the junior
subordinated debt securities held by the trust will be conditioned on our
receipt of an opinion rendered by an independent tax counsel that such
distribution would not result in the recognition of gain or loss for U.S.
federal income tax purposes by the applicable holders. (See sections 8.1 and
8.2
of the amended trust agreement.)
Liquidation
Distribution Upon Dissolution
The
amended trust agreement will state that the trust will be
dissolved:
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upon
the filing of a certificate of dissolution or its equivalent with
respect
to us;
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after
obtaining the consent of at least a majority entitled to receive
the
liquidation amount of the trust preferred securities, voting together
as a
single class;
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90
days after the revocation of our charter, but only if the charter
is not
reinstated during that 90-day
period;
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upon
the distribution of the junior subordinated debt securities held
by the
trust directly to the holders of its trust
securities;
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upon
the redemption of all of the trust securities of the trust;
or
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upon
entry of a court order for the dissolution of us or the trust. (See
section 8.1 of the amended trust
agreement.)
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In
the
event of a dissolution, after the trust pays all amounts owed to its creditors,
the holders of its trust preferred securities will be entitled to
receive:
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cash
equal to the total liquidation amount of each such related trust
preferred
security specified in an accompanying prospectus supplement, plus
accumulated and unpaid distributions to the date of payment,
or
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junior
subordinated debt securities in a total principal amount equal to
the
total liquidation amount of such trust preferred
securities.
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If
the
trust cannot pay the full amount due on its trust securities because
insufficient assets are available for payment, then the amounts payable by
the
trust on its trust securities will be paid proportionately. However, if an
event
of default under the amended trust agreement relating to the trust occurs,
the
total amounts due on the trust preferred securities will be paid before any
distribution on the trust’s common securities. Under certain circumstances
involving the dissolution of the trust, subject to obtaining any required
regulatory approval, junior subordinated debt securities will be distributed
to
the holders of the trust securities in liquidation of the trust. (See section
8.2 of the amended trust agreement.)
Trust
Enforcement Events
An
event
of default under the subordinated indenture relating to the junior subordinated
debt securities held by the trust will be an event of default under the amended
trust agreement for the trust (a Trust Enforcement Event). (See “Description
of Junior Subordinated Debt Securities—Junior Subordinated Debt Security Events
Of Default.”)
In
addition, the voluntary or involuntary dissolution, winding up or termination
of
the trust is also a Trust Enforcement Event, except in connection
with:
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the
distribution of the junior subordinated debt securities to holders
of the
trust securities of the trust,
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the
redemption of all of the trust securities of the trust,
and
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mergers,
consolidations or amalgamations permitted by the amended trust agreement
relating to the trust.
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Under
the
amended trust agreement relating to the trust, the holder of the trust’s common
securities will be deemed to have waived any Trust Enforcement Event with
respect to the trust’s common securities until all Trust Enforcement Events with
respect to the trust preferred securities have been cured, waived or otherwise
eliminated. Until all Trust Enforcement Events with respect to the trust
preferred securities have been so cured, waived, or otherwise eliminated, the
property trustee will be deemed to be acting solely on behalf of the holders
of
the trust preferred securities and only those holders will have the right to
direct such property trustee with respect to certain matters under the amended
trust agreement and the subordinated indenture. In the event that any Trust
Enforcement Event with respect to the trust preferred securities is waived
by
the holders of such preferred securities as provided in the amended trust
agreement, under that amended trust agreement the holders of the trust’s common
securities have agreed that the waiver also constitutes a waiver of the Trust
Enforcement Event with respect to the trust’s common securities for all purposes
under the amended trust agreement without any further act, vote or consent
of
the holders of trust common securities of the trust. (See section 2.6 of the
amended trust agreement.)
We
and
the administrative trustees must file annually with the property trustee a
certificate evidencing compliance with all the applicable conditions and
covenants under the amended trust agreement.
Upon
the
occurrence of a Trust Enforcement Event the property trustee of the trust,
as
the sole holder of the junior subordinated debt securities, will have the right
under the subordinated indenture to declare the principal of, interest and
premium, if any, on the junior subordinated debt securities held by the trust
to
be immediately due and payable.
If
the
property trustee of the trust fails to enforce its rights under the amended
trust agreement or the subordinated indenture to the fullest extent permitted
by
law and subject to the terms of the amended trust agreement and the subordinated
indenture, any holder of trust preferred securities of the trust may sue us,
or
seek other remedies, to enforce such property trustee’s rights under the amended
trust agreement or the subordinated indenture without first instituting a legal
proceeding against such property trustee or any other person. If a Trust
Enforcement Event occurs and is continuing as a result of our failure to pay,
when applicable, principal of or interest or premium, if any, on the junior
subordinated debt securities held by the trust, then a holder of the trust
preferred securities may directly sue us or seek other remedies, to collect
its
proportionate share of payments owed. (See “Relationship
Among the Trust Preferred Securities, the Guarantee and the Junior Subordinated
Debt Securities held by the Trust.”)
Removal
and Replacement of Trustees
We
will,
as the holder of trust common securities of the trust, generally have the right
to remove or replace the trustees of the trust, except that while an event
of
default in respect of the junior subordinated debt securities held by the trust
has occurred and is continuing, the holders of a majority of the liquidation
amount of all outstanding trust preferred securities of the trust will have
this
right. However, in the case of administrative trustees, the holders of a
majority of the liquidation amount of trust common securities may still appoint
or remove these trustees at a meeting or by written consent. The resignation
or
removal of the property trustee or the Delaware trustee and the appointment
of a
successor trustee will be effective only on the acceptance of appointment by
such successor trustee in accordance with the provisions of the amended trust
agreement. (See section 6.6 of the amended trust agreement.)
Mergers,
Consolidations or Amalgamations of the Trust
The
trust
may not consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to any other corporation or other body (each, a “Merger
Event”),
except as described below. The trust may, with the consent of a majority of
its
administrative trustees and without the consent of the holders of its trust
securities, consolidate, amalgamate, merge with or into, or be replaced by
another trust, provided that:
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the
successor entity either: assumes all of the obligations of the trust
relating to its trust securities, or substitutes other securities
for the
trust securities that are substantially similar to the trust securities,
so long as the successor securities rank the same as the trust securities
for distributions and payments upon liquidation, redemption and
otherwise;
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we
acknowledge a trustee of the successor entity who has the same powers
and
duties as the property trustee of the trust, as the holder of the
junior
subordinated debt securities;
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the
trust preferred securities of the trust are listed, or any successor
securities will be listed, upon notice of issuance, on any national
securities exchange or the same securities exchange or other organization
that the trust preferred securities are then
listed;
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the
Merger Event does not cause the trust preferred securities or successor
securities of the trust to be downgraded by any nationally recognized
rating agency;
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the
Merger Event does not adversely affect the rights, preferences and
privileges of the holders of the trust preferred securities or successor
securities of the trust in any material
respect;
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the
successor entity has a purpose identical to that of the
trust;
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prior
to the Merger Event, we have received an opinion of counsel stating
that:
the Merger Event does not adversely affect the rights of the holders
of
the trust preferred securities or any successor securities of the
trust in
any material respect, and following the Merger Event, neither the
trust
nor the successor entity will be required to register as an investment
company under the Investment Company
Act;
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we
own all of the trust common securities and guarantee the obligations
of
the successor entity under the successor securities at least to the
same
extent provided by the guarantee;
and
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the
successor entity expressly assumes all of the obligations of the
trust
owed to the trustee of the trust.
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In
addition, unless all of the holders of the trust preferred securities and trust
common securities of the trust approve otherwise, the trust will not
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into,
or
replace it, if, in the opinion of a nationally recognized tax counsel
experienced in such matters, the transaction would cause the trust or the
successor entity to be classified other than as a grantor trust for U.S. federal
income tax purposes. (See section 3.15 of the amended trust
agreement.)
Voting
Rights; Amendment of Trust Agreement
The
holders of trust preferred securities have no voting rights except as discussed
under “—Mergers,
Consolidations or Amalgamations of the Trust”
and
“Description
of the Guarantee—Amendments,”
and
as
otherwise required by law and the amended trust agreement.
The
amended trust agreement of the trust may be amended if approved by us and a
majority of the administrative trustees and the property trustee of the trust.
However, if any proposed amendment provides for, or the administrative trustees
otherwise propose to effect,
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any
action that would adversely affect the powers, preferences or special
rights of the trust securities of the trust, whether by way of amendment
to the amended trust agreement or otherwise,
or
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the
dissolution, winding-up or termination of the trust other than under
the
terms of its amended trust
agreement,
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then
the
holders of the trust preferred securities as a single class will be entitled
to
vote on the amendment or proposal. In that case, the amendment or proposal
will
only be effective if approved by at least a majority in liquidation amount
of
the trust preferred securities affected by the amendment or
proposal.
No
amendment may be made to the amended trust agreement if that amendment
would:
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cause
the trust to be characterized as other than a grantor trust for U.S.
federal income tax purposes;
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reduce
or otherwise adversely affect the powers of the property trustee;
or
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cause
the trust to be deemed to be an investment company which is required
to be
registered under the Investment Company Act. (See section 11.1 of
the
amended trust agreement.)
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The
holders of a majority of the total liquidation amount of the trust preferred
securities of the trust have the right to:
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direct
the time, method and place of conducting any proceeding for any remedy
available to the property trustee for the trust;
or
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direct
the exercise of any power conferred upon such property trustee under
the
amended trust agreement, including the right to direct such property
trustee, as the holder of the junior subordinated debt securities,
to:
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exercise
the remedies available under the subordinated indenture with respect
to
the junior subordinated debt securities held by the
trust;
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consent
to any amendment of the subordinated indenture with respect to the
junior
subordinated debt securities held by the trust or of such securities
where
consent is required;
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waive
any event of default under the subordinated indenture that is waivable;
or
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cancel
an acceleration of the principal of the junior subordinated debt
securities held by the trust.
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In
addition, before taking any of the foregoing actions, such property trustee
must
obtain an opinion of counsel stating that, as a result of that action, the
trust
will continue to be classified as a grantor trust for U.S. federal income tax
purposes. (See section 7.5 of the amended trust agreement.)
If
a vote
by the holders of trust preferred securities of the trust is taken or a consent
is obtained, any trust preferred securities of the trust owned by us or any
of
our affiliates will, for purposes of the vote or consent, be treated as if
they
were not outstanding, which will have the following consequences:
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we
and any of our affiliates will not be able to vote on or consent
to
matters requiring the vote or consent of holders of trust preferred
securities of the trust; and
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any
trust preferred securities of the trust owned by us or any of our
affiliates will not be counted in determining whether the required
percentage of votes or consents has been obtained. (See section 7.5
of the
amended trust agreement.)
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Concerning
the Property Trustee
JPMorgan
Chase Bank is the property trustee and the guarantee trustee. JPMorgan Chase
Bank is also the trustee under the senior indenture and the subordinated
indenture. JPMorgan Chase Bank also serves as the property trustee relating
to
trust preferred securities previously issued by Energy East Capital Trust I,
as
well as the trustee under the first mortgage bond indenture with respect to
the
first mortgage bonds and trustee under the unsecured debt indenture with respect
to senior unsecured debt securities issued by our subsidiary, NYSEG. We maintain
other banking relationships in the ordinary course of business with the property
trustee and its affiliates.
For
matters relating to compliance with the Trust Indenture Act, the property
trustee will have all of the duties and responsibilities of an indenture trustee
under the Trust Indenture Act. The property trustee, other than during the
occurrence and continuance of a Trust Enforcement Event, undertakes to perform
only the duties that are specifically described in the amended trust agreement
and, upon a Trust Enforcement Event, must use the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the property trustee is under no obligation
to exercise any of the powers given it by the amended trust agreement at the
request of any holder of trust preferred securities unless it is offered
reasonable security or indemnity against the costs, expenses and liabilities
that it might incur. However, the holders of the trust preferred securities
of
the trust will not be required to offer such an indemnity where such holders,
by
exercising their voting rights, direct the property trustee to take any action
following a Trust Enforcement Event. (See sections 3.9 and 3.10 of the amended
trust agreement.)
Concerning
the Delaware Trustee
Chase
Manhattan Bank USA, National Association, will serve as trustee of the trust
in
the State of Delaware for the purpose of complying with the provisions of the
Delaware Statutory Trust Act. It is an affiliate of JPMorgan Chase Bank which
serves as property trustee and in the other capacities described above under
“—Concerning
the Property Trustee.”
Concerning
the Administrative Trustees
The
administrative trustees are authorized and directed to conduct the affairs
of
and to operate the trust in a way that:
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will
not cause the trust to be deemed to be an investment company required
to
be registered under the Investment Company
Act;
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will
cause the trust to be classified as a grantor trust for U.S. federal
income tax purposes; and
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will
cause the junior subordinated debt securities that the trust holds
to be
treated as our indebtedness for U.S. federal income tax
purposes.
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We
and
the administrative trustees are authorized to take any action, so long as it
is
consistent with applicable law or the certificate of trust or amended trust
agreement, that we and the administrative trustees determine to be necessary
or
desirable for those purposes. (See section 3.6 of the amended trust
agreement.)
Guarantee
We
will
execute a guarantee from time to time for the benefit of the holders of the
trust preferred securities at the time that the trust issues those trust
preferred securities. JPMorgan Chase Bank will act as guarantee trustee under
the guarantee. The guarantee trustee will hold the guarantee for the benefit
of
the holders of the trust preferred securities of the trust. The following
description of the guarantee is only a summary. The form of guarantee is filed
as an exhibit to the registration statement of which this prospectus forms
a
part and is incorporated by reference.
General
We
will
irrevocably and unconditionally agree under the guarantee to pay on a
subordinated basis the guarantee payments that are defined below, to the extent
specified in the guarantee, to the holders of the trust preferred securities
to
which the guarantee relates, to the extent that the guarantee payments are
not
paid by or on behalf of the trust. We are required to pay the guarantee payments
to the extent specified in the guarantee regardless of any defense, right of
set-off or counterclaim that we may have or may assert against any
person.
The
following payments and distributions on the trust preferred securities of the
trust are guarantee payments:
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any
accumulated and unpaid distributions required to be paid on the trust
preferred securities, but only to the extent that the trust has funds
legally and immediately available for those
distributions;
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the
redemption price for any trust preferred securities, including all
accumulated and unpaid distributions to the redemption date, but
only to
the extent that the trust has funds legally and immediately available
for
the payment; and
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upon
a dissolution, winding-up or termination of the trust, other than
in
connection with the distribution of junior subordinated debt securities
to
the holders of trust securities of the trust or the redemption of
all the
trust preferred securities of the trust, the lesser
of:
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the
sum of the liquidation amount and all accumulated and unpaid distributions
on the trust preferred securities of the trust to the payment date,
to the
extent that the trust has funds legally and immediately available
for the
payment, and
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the
amount of assets of the trust remaining available for distribution
to
holders of the trust preferred securities in liquidation of the
trust.
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We
may
satisfy our obligation to make a guarantee payment by making that payment
directly to the holders of the trust preferred securities or by causing the
trust to make the payment to those holders. (See section 5.1 of the
guarantee.)
The
guarantee will be a full and unconditional guarantee, subject to certain
subordination provisions, of the guarantee payments with respect to the trust
preferred securities from the time of issuance of the trust preferred
securities, except that the guarantee will only apply to the payment of
distributions and other payments on the trust preferred securities when the
trust has sufficient funds legally and immediately available to make those
distributions or other payments.
If
we do
not make the required payments on the junior subordinated debt securities that
the property trustee holds under the trust, the trust will not make the related
payments on its trust preferred securities.
Subordination
Our
obligations under the guarantee will be unsecured obligations. Those obligations
will rank:
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subordinate
and junior in right of payment to all of our other liabilities, other
than
obligations or liabilities that rank equal in priority with or subordinate
to the guarantee by their terms;
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equal
in priority with the junior subordinated debt securities that we
may issue
and similar guarantees; and
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senior
to our common stock.
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Our
outstanding common stock will rank junior to the guarantee. We also have $345
million of junior subordinated debt securities that are held by Energy East
Capital Trust I and that will rank on parity with the guarantee. We have $1,150
million of senior debt securities currently outstanding that will rank senior
to
the guarantee.
Each
guarantee will be a guarantee of payment and not of collection. This means
that
the guaranteed party may institute a legal proceeding directly against us,
as
guarantor, to enforce its rights under the guarantee without first instituting
a
legal proceeding against any other person or entity. (See sections 5.4 and
5.5
of the guarantee.)
The
terms
of the trust preferred securities will provide that each holder of the trust
preferred securities, by accepting those trust preferred securities, agrees
to
the subordination provisions and other terms of the guarantee.
Amendments
We
may
amend the guarantee without the consent of any holder of the trust preferred
securities of the trust if the amendment does not materially and adversely
affect the rights of those holders. We may otherwise amend the guarantee with
the approval of the holders of at least 50% of the outstanding trust preferred
securities. (See section 9.2 of the guarantee.)
Termination
The
guarantee will terminate and be of no further effect when:
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the
redemption price of the trust preferred securities is fully
paid;
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we
distribute the related junior subordinated debt securities to the
holders
of the trust preferred securities;
or
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the
amounts payable upon liquidation of the trust are fully paid. (See
section
7.1 of the guarantee.)
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The
guarantee will remain in effect or will be reinstated if at any time any holder
of trust preferred securities must restore payment of any suns paid to that
holder with respect to those trust preferred securities or under the
guarantee.
Material
Covenants
We
will
covenant that, so long as any trust preferred securities remain outstanding,
if
there is an event of default under the guarantee or the subordinated indenture,
or if we give notice of our election to extend the interest payment period
on
the junior subordinated debt securities:
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we
will not make distributions related to our debt securities that rank
equally with or junior to the junior subordinated debt securities,
including any payment of interest, principal or premium, or repayments,
repurchases or redemptions; and
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we
will not make distributions related to our capital stock, including
dividends, redemptions, repurchases, liquidation payments, or guarantee
payments.
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We
may,
however, make the following types of distributions:
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dividends
paid in common stock;
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dividends
in connection with the implementation of a shareholders’ rights
plan:
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payments
to a trust holding securities of the same series under a guarantee;
and
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purchases
of our common stock in connection with the issuance of our common
stock or
rights under any benefit plan or other similar arrangement with or
for the
benefit of employees, officers or directors or our dividend reinvestment
plan. (See section 6.1 of the
guarantee.)
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Because
we are a holding company that conducts all of our operations through our
subsidiaries, our ability to meet our obligations under the guarantee is
dependent on the earnings and cash flows of those subsidiaries and the ability
of those subsidiaries to pay dividends or to advance or repay funds to us.
The
trust, as a holder of the guarantee and the junior subordinated debt securities,
will generally have a junior position to claims of creditors of our
subsidiaries, including trade creditors, debtholders, secured creditors, taxing
authorities and any guarantee holders.
Events
of Default
An
event
of default will occur under the guarantee if we fail to perform any of our
payment obligations under the guarantee. The holders of a majority in
liquidation amount of the trust preferred securities may waive any such event
of
default and its consequences on behalf of all of the holders of those trust
preferred securities. The guarantee trustee is entitled to enforce the guarantee
for the benefit of the holders of the trust preferred securities if an event
of
default occurs under the guarantee. (See sections 2.6 and 3.1 of the
guarantee.)
The
holders of a majority of the trust preferred securities have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the guarantee trustee with respect to that guarantee or to direct the
exercise of any trust or power that the guarantee trustee holds under that
guarantee. If the guarantee trustee fails to enforce the guarantee, any holder
of the trust preferred securities may institute a legal proceeding directly
against us to enforce the guarantee trustee’s rights under the guarantee without
first instituting a legal proceeding against the applicable trust, guarantee
trustee or any other person or entity. (See section 5.4 of the
guarantee.)
Concerning
the Guarantee Trustee
JPMorgan
Chase Bank is the guarantee trustee. It is also the property trustee, the
subordinated indenture trustee and the senior indenture trustee. JPMorgan Chase
Bank also serves as the property trustee and the guarantee trustee relating
to
trust preferred securities previously issued by Energy East Capital Trust I,
as
well as the trustee under the first mortgage bond indenture with respect to
the
first mortgage bonds and trustee under the unsecured debt indenture with respect
to senior unsecured debt securities issued by our subsidiary, NYSEG. We maintain
other banking relationships in the ordinary course of business with the
guarantee trustee and its affiliates.
The
guarantee trustee will perform only those duties that are specifically set
forth
in the guarantee unless an event of default under the guarantee occurs and
is
continuing. In case an event of default occurs and is continuing, the guarantee
trustee will exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to those provisions,
the guarantee trustee is under no obligation to exercise any of its powers
under
the guarantee at the request of any holder of trust preferred securities unless
that holder offers reasonable indemnity to the guarantee trustee against the
costs, expenses and liabilities which it might incur as a result. (See sections
3.1 and 3.2 of the guarantee.)
Governing
Law
The
guarantee will be governed by and construed in accordance with the laws of
the
State of New York.
Agreement
as to Expenses and Liabilities
We
will
enter into an agreement as to expenses and liabilities as required under the
amended trust agreement. The agreement as to expenses and liabilities will
provide that we will, with certain exceptions, irrevocably and unconditionally
guarantee the full payment of any indebtedness, expenses or liabilities of
the
trust to each person or entity to whom the trust becomes indebted or liable.
The
exceptions are the obligations of the trust to pay to the holders of the trust
securities or other similar interests in that trust the amounts due to the
holders under the terms of those trust securities or those similar
interests.
Relationship
Among the Trust Preferred Securities, the Guarantee and the Junior Subordinated
Debt Securities held by the Trust
We
will
guarantee payments of distributions and redemption and liquidation payments
due
on the trust preferred securities of the trust, to the extent the trust has
funds available for the payments, to the extent described under “Description
of the Guarantee”
No
single document executed by us in connection with the issuance of the trust
preferred securities will provide for our full, irrevocable and unconditional
guarantee of those trust preferred securities. It is only the combined operation
of our obligations under the guarantee, the amended trust agreement and the
subordinated indenture that has the effect of providing a full, irrevocable
and
unconditional guarantee of the trust’s obligations under the trust preferred
securities.
As
long
as we make payments of interest and other payments when due on the junior
subordinated debt securities held by the trust, those payments will be
sufficient to cover the payment of distributions and redemption and liquidation
payments due on the trust preferred securities issued by the trust, primarily
because:
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the
total principal amount of the junior subordinated debt securities
will be
equal to the sum of the total liquidation amount of the trust preferred
securities;
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the
interest rate and interest and other payment dates on the junior
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the trust preferred
securities;
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we
will pay for any and all costs, expenses and liabilities of the
trust
except its obligations under its trust securities;
and
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the
amended trust agreement will provide that the trust will not engage
in any
activity that is not consistent with the limited purposes of the
trust.
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If
and to
the extent that we do not make payments on the junior subordinated debt
securities held by the trust, the trust will not have funds available to make
payments of distributions or other amounts due on its trust preferred
securities. In those circumstances, you will not be able to rely upon the
guarantee for payment of these amounts. Instead, you may directly sue us or
seek
other remedies to collect your proportionate share of payments owed. If you
sue
us to collect payment, then we will assume your rights as a holder of the trust
preferred securities under the amended trust agreement to the extent we make
a
payment to you in any such legal action.
Accounting
Treatment
The
trust
will be treated as a subsidiary of ours for financial reporting purposes.
Accordingly, our consolidated financial statements will include the accounts
of
the trust. The trust preferred securities of the trust, along with other trust
preferred securities that we guarantee on an equivalent basis, will be presented
as a separate line item in our consolidated balance sheets, and appropriate
disclosures about the trust preferred securities, the guarantee and the junior
subordinated debt securities will be included in the notes to the consolidated
financial statements. We will record distributions that the trust pays on its
trust preferred securities as an expense in our consolidated statement of
income.
PLAN
OF DISTRIBUTION
We
and
the trust may use the following methods to sell the securities:
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through
negotiation with one or more
underwriters;
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through
one or more agents or dealers designated from time to
time;
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directly
to purchasers; or
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through
any combination of the above.
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The
distribution of the securities may be effected from time to time in one or
more
transactions at a fixed price or prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. A prospectus supplement or a supplement thereto
will describe the method of distribution of any series of
securities.
If
we,
and the trust, if applicable, use any underwriters in the sale of securities,
we
and the trust, if applicable, will enter into an underwriting agreement,
distribution agreement or similar agreement with such underwriters prior to
the
time of sale, and the names of the underwriters used in the transaction will
be
set forth in a prospectus supplement or a supplement thereto relating to such
sale. If an underwriting agreement is executed, the securities will be acquired
by the underwriters for their own account and may be resold from time to time
in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of the sale. Unless
we otherwise indicate in the prospectus supplement, the underwriting or purchase
agreement will provide that the underwriter or underwriters are obligated to
purchase all of the securities offered in the prospectus supplement if any
are
purchased.
If
any
securities are sold through agents designated by us from time to time, the
prospectus supplement or a supplement thereto will name any such agent, set
forth any commissions payable by us to any such agent and the obligations of
such agent with respect to the securities. Unless otherwise indicated in the
prospectus supplement or a supplement thereto, any such agent will be acting
on
a best efforts basis for the period of its appointment.
Certain
persons participating in an offering of the securities may engage in
transactions that stabilize, maintain or otherwise affect the price of the
securities. Specifically, the underwriters, if any, may sell more securities
than they are obligated to purchase in connection with the offering, creating
a
short position for their own accounts. A short sale is covered if the short
position is no greater than the number or amount of securities available for
purchase by the underwriters under any overallotment option. The underwriters
can close out a covered short sale by exercising the overallotment option or
purchasing these securities in the open market. In determining the source of
securities to close out a covered short sale, the underwriters will consider,
among other things, the open market price of these securities compared to the
price available under the overallotment option. The underwriters may also sell
these securities or any other securities in excess of the overallotment option,
creating a naked short position. The underwriters must close out any naked
short
position by purchasing securities in the open market. A naked short position
is
more likely to be created if the underwriters are concerned that there may
be
downward pressure on the price of these securities in the open market after
pricing that could adversely affect investors who purchase in the offering.
As
an additional means of facilitating the offering, the underwriters, if any,
may
bid for, and purchase, these securities in the open market to stabilize the
price of these securities. Finally, in any offering of the securities through
a
syndicate of underwriters, the underwriting syndicate may also reclaim selling
concessions allowed to an underwriter or a dealer for distributing these
securities in the offering, if the syndicate repurchases previously distributed
securities to cover syndicate short positions or to stabilize the price of
these
securities. Any of these activities may raise or maintain the market price
of
these securities above independent market levels or prevent or retard a decline
in the market price of these securities. The underwriters, if any, are not
required to engage in these activities and may end any of these activities
at
any time.
No
series
of securities, when first issued, will have an established trading market.
Any
underwriters or agents to or through whom securities are sold by us for public
offering and sale may make a market in such securities, but underwriters and
agents will not be obligated to do so and may discontinue any market making
at
any time without notice. We cannot assure you as to the liquidity of the trading
market for any securities.
In
connection with the sale of the securities, any purchasers, underwriters or
agents may receive compensation from us or from purchasers in the form of
concessions or commissions. The underwriters will be, and any agents and any
dealers participating in the distribution of the securities may be, deemed
to be
underwriters within the meaning of the Securities Act of 1933. The agreement
between us, and the trust, if applicable, and any purchasers, underwriters
or
agents will contain reciprocal covenants of indemnity, and will provide for
contribution by us in respect of our indemnity obligations, between us, and
the
trust, if applicable, and the purchasers, underwriters, or agents against
certain liabilities, including liabilities under the Securities Act of
1933.
Underwriters,
dealers and agents may engage in transactions with, or perform services for,
us
and our affiliates in the ordinary course of business.
EXPERTS
The
consolidated financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-K for the year ended December 31, 2002 have
been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL
MATTERS
The
validity of the debt securities and certain other matters will be passed upon
for us by Huber Lawrence & Abell, New York, New York, and for any
underwriters, dealers or agents by Shearman & Sterling LLP, New York, New
York. Certain matters relating to the formation of the trust and issuance of
the
trust preferred securities under Delaware law and the amended trust agreement
will be passed upon by Richards, Layton & Finger, PA., special Delaware
counsel to the trust and us. As of June 12, 2003, members of Huber Lawrence
& Abell owned 6,420 shares of our common stock.
(This
page has been left blank intentionally.)
$250,000,000
ENERGY
EAST CORPORATION
%
Notes due 2036
PROSPECTUS
SUPPLEMENT
JULY
, 2006
Joint
Book-Running Managers
Banc
of America Securities LLC
Wachovia
Securities
Co-Managers
HSBC
UBS
Investment Bank