As Filed with the Securities and Exchange Commission on January 20, 2000
Registration No. 333-92003
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
KEYSPAN CORPORATION KEYSPAN GAS EAST CORPORATION
(Exact name of registrant as specified in its charter)
New York New York
(State of incorporation)
11-3431358 11-3434848
(I.R.S. employer identification number)
Steven L. Zelkowitz
175 East Old Country Road, Hicksville, New York 11801
One MetroTech Center, Brooklyn, New York 11201
(516) 755-6650 (Hicksville)
(718) 403-1000 (Brooklyn)
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices and agent for service of both
registrants)
Copies to:
Raymond W. Wagner
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Matthew G. Maloney
Dickstein Shapiro Morin & Oshinsky
LLP
2101 L Street, N.W.
Washington, D.C. 20037
Approximate date of commencement of proposed sale to public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. /__/
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following
box. /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. /__/
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. /__/
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. /__/
The Registrants hereby amend this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrants shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act or until this
Registration Statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section 8(a),
may determine.
CALCULATION OF REGISTRATION FEE Proposed Maximum Proposed Maximum
Title Of Each Class of Amount To Be Aggregate Price Aggregate Amount of
Securities To Be Registered Registered Per Unit<F2> Offering Price Registration Fee
Debt Securities . . . . . . . . . . . . . $600,000,000<F1> 100% $600,000,000 $166,800
Guarantees of Debt Securities . . . . . . -- <F3> <F3> <F4>
Total . . . . . . . . . . . . . . . . . . $600,000,000<F1> 100% $600,000,000 $166,800<F5>
<FN>
<F1> Or an equivalent amount, based upon the exchange rate on the
applicable trade date, in a foreign currency or currency unit identified
by the Issuer on the issue date.
<F2> Estimated solely for the purpose of calculating the registration
fee.
<F3> No separate consideration will be received for the guarantees and
the Guarantor will not be paid any portion of the proceeds in
respect of the guarantees.
<F4> Pursuant to Rule 457(n) under the Securities Act of 1933, no
registration fee is required with respect to the guarantees.
<F5> Previously paid.
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PROSPECTUS
KEYSPAN GAS EAST CORPORATION
$600,000,000
DEBT SECURITIES
Guaranteed Fully and Unconditionally by
KEYSPAN CORPORATION
The Issuer: issue and offer up to
$600,000,000 of its debt
- - KeySpan Gas East Corporation securities.
d/b/a Brooklyn Union of Long
Island sells, distributes - The debt securities may be
and transports natural gas offered as separate series,
to approximately 467,000 in amounts, prices and on
customers in Nassau and terms to be determined at
Suffolk Counties on Long the time of the sale. When
Island and a portion of the Issuer offers debt
Queens County in New York securities, it will provide
City. The Issuer is a you with a prospectus
wholly-owned subsidiary of supplement or a term sheet
KeySpan Corporation, which describing the terms of the
is the guarantor of the debt specific issue of debt
securities. securities including the
offering price of the
The Guarantor: securities.
- - KeySpan Corporation d/b/a - The Issuer may sell the
KeySpan Energy, with its debt securities to agents,
subsidiaries, is the fourth underwriters or dealers, or
largest gas distribution may sell them directly to
company in the United other purchasers.
States, with 1.6 million
customers in New York City - You should read this
and on Long Island. It also prospectus and the
provides power, electric prospectus supplement or
transmission and the term sheet relating to
distribution services and a the specific issue of debt
broad range of related securities carefully before
services in the gas and you invest.
electric power industries.
The Guarantees:
The Debt Securities and the
Offering: - The payment of principal,
premium, if any, and
- - By this prospectus, the interest, if any, on the
Issuer may from time to time debt securities will be
guaranteed fully and
unconditionally by KeySpan
Corporation d/b/a KeySpan
Energy, as Guarantor.
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities or
determined if this prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
The date of this prospectus is January , 2000.
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TABLE OF CONTENTS
Page
ABOUT THIS PROSPECTUS . . . . . . . . . . . . . . . . . . . . . . . . 1
WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . . . . 1
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . 2
THE ISSUER AND THE GUARANTOR . . . . . . . . . . . . . . . . . . . . 4
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
RATIO OF EARNINGS TO FIXED CHARGES . . . . . . . . . . . . . . . . . 7
DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . 8
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . 24
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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ABOUT THIS PROSPECTUS
As used in this prospectus and any prospectus supplement or term
sheet, except as the context otherwise requires, "Guarantor" means
KeySpan Corporation doing business as KeySpan Energy, "Issuer" means
KeySpan Gas East Corporation doing business as Brooklyn Union of Long
Island, and references to "we" "us" and "our" mean KeySpan Corporation
doing business as KeySpan Energy, together with its consolidated
subsidiaries, including KeySpan Gas East Corporation doing business as
Brooklyn Union of Long Island.
RISK FACTORS
Each time that the Issuer issues a new series of debt securities,
risk factors, if appropriate, will be included in the prospectus
supplement relating to that new series.
WHERE YOU CAN FIND MORE INFORMATION
The Guarantor files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
of these documents at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-
800-SEC-0330 for further information on the public reference rooms. The
Guarantor's SEC filings are also available to the public on the SEC's web
site at http://www.sec.gov.
The Issuer and the Guarantor have filed a joint registration
statement on Form S-3 with the SEC covering the debt securities. For
further information on us and the debt securities, you should refer to
the registration statement and its exhibits. This prospectus summarizes
material provisions of the indenture, including the guarantees. Because
the prospectus may not contain all the information that you may find
important, you should review the full text of these documents. We have
included copies of these documents in an exhibit to our registration
statement of which this prospectus is a part.
The SEC allows the Guarantor to "incorporate by reference" the
information the Guarantor files with the SEC, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be
part of this prospectus, and later information that the Guarantor files
with the SEC will automatically update and supersede this information.
The Guarantor incorporates by reference the documents listed below and
any future filings made with the SEC under Sections 13(a), 13(c), 14, or
15(d) of the Securities Exchange Act of 1934 until the Issuer sells all
the debt securities.
- Annual Report on Form 10-K of KeySpan Corporation (formerly known
as MarketSpan Corporation) for the transition period from April
1, 1998 to December 31, 1998;
1
- Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1999;
- Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1999;
- Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999;
- Current Reports on Form 8-K dated February 4, 1999, February 12,
1999, March 31, 1999, May 20, 1999, June 22, 1999, September 16,
1999, November 5, 1999, December 2, 1999 and January 19, 2000.
You may request a copy of these filings, at no cost, over the
Internet at our web site at http://www.keyspanenergy.com or by writing or
telephoning us at the following address:
Investor Relations
KeySpan Corporation
One MetroTech Center
Brooklyn, New York, 11201
(718) 403-3265
You should rely only on the information incorporated by reference
or provided in this prospectus or any supplement or term sheet. We have
not authorized anyone else 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 in this
prospectus or any supplement is accurate as of any date other than the
date on the front of these documents.
FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus, any prospectus
supplement or term sheet and the documents we have incorporated by
reference contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, as amended. Such
statements relate to future events or our future financial performance.
We use words such as "anticipate", "believe", "expect", "may", "project",
"will" or other similar words to identify forward-looking statements.
Without limiting the foregoing, all statements relating to our
- anticipated capital expenditures,
- future cash flows and borrowings,
- pursuit of potential future acquisition opportunities, and
- sources of funding
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are forward-looking statements. These forward-looking statements are
based on numerous assumptions that we believe are reasonable, but they
are open to a wide range of uncertainties and business risks and actual
results may differ materially from those discussed in these statements.
Among the factors that could cause actual results to differ
materially are:
- available sources and costs of fuel;
- federal and state regulatory initiatives that increase
competition, threaten cost and investment recovery and impact
rate structure;
- our ability to successfully reduce our cost structures;
- the successful integration of our subsidiaries;
- the degree to which we develop unregulated business ventures;
- our ability to identify and make complementary acquisitions, as
well as the successful integration of those acquisitions; and
- inflationary trends and interest rates.
When considering these forward-looking statements, you should keep
in mind the cautionary statements in this document, any prospectus
supplement or term sheet and the documents incorporated by reference. We
will not update these statements unless the securities laws require us to
do so.
3
THE ISSUER AND THE GUARANTOR
The Issuer
The Issuer, KeySpan Gas East Corporation, does business under the
name Brooklyn Union of Long Island. It is a wholly owned subsidiary of
KeySpan Corporation, which does business under the name KeySpan Energy.
The Issuer conducts the gas distribution business formerly carried
on by the Long Island Lighting Company. It sells, distributes and
transports natural gas in a service territory of approximately 1,230
square miles in the Long Island counties of Nassau and Suffolk and the
Rockaway peninsula of Queens County. It owns and operates gas
distribution, transmission and storage systems that consist of
approximately 6,292 miles of distribution pipelines, 333 miles of
transmission pipelines and a gas storage facility. The Issuer serves
approximately 467,000 customers, of which approximately 418,000, or 90%,
are residential.
The Issuer offers gas for sale to residential customers on a "firm"
basis, and to commercial and industrial customers on a "firm" or
"interruptible" basis. The Issuer offers "firm" service to customers
under rate schedules or contracts that anticipate no interruptions. It
offers "interruptible" service to customers under rate schedules or
contracts that anticipate and permit interruption on short notice,
generally in peak-load seasons. Gas is available at any time of the year
on an "interruptible" basis, if the supply is sufficient and the supply
system is adequate.
The Issuer also participates in the interstate markets by releasing
pipeline capacity or bundling pipeline capacity with gas for "off-system"
sales. An "off-system" customer consumes gas at facilities located
outside the Issuer's service territory, by connecting to the Issuer's
facilities or one of its transporter's facilities, at a point of delivery
agreed to by the Issuer and the customer.
The Issuer purchases its natural gas for sale to its customers
under long-term supply contracts and short-term spot contracts. This
gas is transported under both firm and interruptible transportation
contracts. In addition, the Issuer has commitments from third parties for
the provision of gas storage capability and peaking supplies.
The Issuer was incorporated in 1998 when all of the assets used in
the gas distribution business formerly owned by the Long Island Lighting
Company were transferred to it. The principal address of the Issuer is
175 East Old Country Road, Hicksville, New York 11801.
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The Guarantor
The Guarantor was formed in connection with a business combination
in May 1998 of KeySpan Energy Corporation, the parent of The Brooklyn
Union Gas Company, and certain businesses of the Long Island Lighting
Company. Our core business is gas distribution, conducted by our two
subsidiaries, Brooklyn Union of New York and the Issuer, which together
distribute gas to approximately 1.6 million customers.
We are also a major, and growing, generator of electricity. We own
and operate five large generating plants and 42 smaller facilities in
Nassau and Suffolk Counties on Long Island and a major facility in Queens
County in New York City. Under contractual arrangements, we provide
power, electric transmission-and-distribution services, billing and
other customer services for approximately one million electric customers
of the Long Island Power Authority. Our other subsidiaries are involved
in gas storage, wholesale and retail gas and electric marketing,
appliance service, and large energy-system ownership, installation and
management. We also invest in, and participate in the development of,
pipelines and other energy projects, domestically and internationally.
In November 1999, the Guarantor and Eastern Enterprises ("Eastern")
announced that they had signed a definitive merger agreement under which
we will acquire all of the common stock of Eastern for $64.00 per share
in cash. The transaction has a total value of approximately $2.5 billion
($1.7 billion in equity and $0.8 billion in assumed debt and preferred
stock). The Guarantor expects to raise $1.7 billion of initial financing
for the transaction in short-term markets which will ultimately be
replaced with long-term financing. The transaction will be accounted for
as a purchase.
Eastern owns and operates Boston Gas Company, Colonial Gas Company,
Essex Gas Company, Midland Enterprises Inc., Transgas Inc. and ServicEdge
Partners, Inc. The following table shows Eastern's revenues, operating
earnings and net earnings for the years 1996 through 1998 and the nine
months ended September 30, 1998 and 1999:
Nine Months Ended
Years Ended December 31, September 30,
1996 1997 1998 1998 1999(1)
($ in thousands)
Revenues . . . . . $1,057,271 $1,023,740 $935,264 $677,228 $660,327
Operating earnings $ 130,234 $ 115,317 $100,405 $ 62,902 $ 54,813
Net earnings . . . $ 64,501 $ 55,916 $105,981<F2> $$86,348<F2> $ 26,905
<FN>
<F1> Eastern acquired Colonial Gas Company on August 31, 1999 in a
transaction accounted for as a purchase.
<F2> Includes reversal of reserves resulting in an extraordinary gain of
$48.4 million on an after-tax basis.
5
At September 30, 1999, Eastern had total assets of $1.9 billion, long-
term debt and preferred stock of $0.5 billion and shareholders' equity of
$0.7 billion.
In July 1999, Eastern announced it had entered into an agreement to
acquire EnergyNorth Inc., owner of New Hampshire's largest natural gas
distributor. EnergyNorth is located across the border from, but
contiguous to, areas served by Eastern's gas distribution subsidiaries.
In connection with our acquisition of Eastern, Eastern has amended its
agreement with EnergyNorth to provide for an all cash acquisition of
EnergyNorth shares at a price per share of $61.13. The restructured
EnergyNorth merger is expected to close contemporaneously with the
KeySpan/Eastern transaction.
The merger of KeySpan Corporation and Eastern is conditioned, among
other things, upon the approval of Eastern's shareholders, the SEC and
the New Hampshire Public Utility Commission. We anticipate that the
transaction can be completed in 6 to 9 months but we are unable to
determine when or if all of the required approvals will be obtained.
The increased size and scope of the combined organization should
enable the combined company to provide enhanced, cost-effective customer
service and to capitalize on the above-average growth opportunities for
natural gas in the Northeast and provide additional resources to our
unregulated businesses. The combined company will serve approximately 2.4
million customers.
6
USE OF PROCEEDS
The Issuer plans to use the proceeds of the offering for the
satisfaction of outstanding obligations, the construction of utility
plants, for reimbursement of the Issuer's treasury, and for any other
proper corporate purposes, including investment in short-term securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows our consolidated ratio of earnings to
fixed charges for the periods indicated.
Nine Months Nine Months
Years Ended Ended Ended
- --------------------------------------------------------------------------
December December March September
31, 31, March 31, 31, December 31, 30,
1995 1996 1997 1998 1998 1999
- --------------------------------------------------------------------------
2.06 2.15 2.21 2.44 <F1> 3.31
<F1> For the nine months ended December 31, 1998, earnings were
insufficient to cover fixed charges by $365.0 million. During the
nine months ended December 31, 1998, the Guarantor incurred the
following special charges (after tax): charges associated with the
transaction with the Long Island Power Authority of $107.9 million;
charges associated with the combination of Long Island Lighting
Company's gas and electric services businesses with KeySpan Energy
Corporation of $83.5 million; an impairment charge of $54.1 million
to write-down the value of proved gas reserves; and a charge of
$13.0 million to establish a not-for-profit philanthropic
foundation.
7
DESCRIPTION OF SECURITIES
The debt securities and the guarantees will be issued under an
indenture, dated as of December 1, 1999, among the Issuer, the Guarantor
and The Chase Manhattan Bank, as trustee. The indenture provides for the
issuance from time to time of debt securities in an unlimited dollar
amount and an unlimited number of series. The debt securities will be
guaranteed by the Guarantor under the guarantees described below.
The following description of the terms of the debt securities and
the guarantees summarizes the material terms that will apply to the debt
securities and the guarantees. The description is not complete, and we
refer you to the indenture, a copy of which is an exhibit to the
registration statement of which this prospectus is a part. For your
reference, in several cases below we have noted the section in the
indenture that the paragraph summarizes. Capitalized terms have the
meanings assigned to them in the indenture. The referenced sections of
the indenture and the definitions of capitalized terms are incorporated
by reference in the following summary.
Prospective purchasers of debt securities should be aware that
special U.S. Federal income tax, accounting and other considerations may
be applicable to instruments such as the debt securities. The prospectus
supplement or term sheet relating to an issue of debt securities will
describe these considerations, if they apply.
Description of Debt Securities
Specific terms of each series
Each time that the Issuer issues a new series of debt securities,
the prospectus supplement or term sheet relating to that new series will
specify the particular amount, price and other terms of those debt
securities. These terms may include:
- the title of the debt securities;
- any limit on the total principal amount of the debt securities;
- the date or dates on which the principal of the debt securities
will be payable or their manner of determination;
- the interest rate or rates of the debt securities; the date or
dates from which interest will accrue on the debt securities; and
the interest payment dates and the regular record dates for the
debt securities; or, in each case, their manner of determination;
8
- the place or places where the principal of and premium and
interest on the debt securities will be paid;
- the period or periods within which, the price or prices at which
and the terms on which any of the debt securities may be
redeemed, in whole or in part at our option, and any remarketing
arrangements;
- the terms on which the Issuer would be required to redeem, repay
or purchase debt securities required by any sinking fund,
mandatory redemption or similar provision; and the period or
periods within which, the price or prices at which and the terms
and conditions on which the debt securities will be so redeemed,
repaid or purchased in whole or in part;
- the denomination in which the debt securities will be issued, if
other than denominations of $1,000 and any whole multiple
thereof;
- the portion of the principal amount of the debt securities that
is payable on the declaration of acceleration of the maturity, if
other than their principal amount; these debt securities could
include OID debt securities or indexed debt securities, which are
each described below;
- whether and under what circumstances the Issuer or the Guarantor
will pay additional amounts under any debt securities held by a
person who is not a U.S. person for tax payments, assessments or
other governmental charges and whether the Issuer or the
Guarantor has the option to redeem the debt securities which are
affected by the additional amounts instead of paying the
additional amounts;
- the form in which the Issuer will issue the debt securities,
whether registered, bearer or both, and any restrictions on the
exchange of one form of debt securities for another and on the
offer, sale and delivery of the debt securities in either form;
- whether the debt securities will be issuable as global
securities;
- whether the amounts of payments of principal of, premium, if any,
and interest, if any, on the debt securities are to be determined
with reference to an index, formula or other method, and if so,
the manner in which such amounts will be determined;
- if the debt securities are issuable in definitive form upon the
satisfaction of certain conditions, the form and terms of such
conditions;
- any trustees, paying agents, transfer agents, registrars,
depositories or similar agents with respect to the debt
securities;
9
- any additions or deletions to the terms of the debt securities
with respect to the events of default or covenants governing the
debt securities;
- the foreign currency or units of two or more foreign currencies
in which payment of the principal of and premium and interest on
any debt securities will be made, if other than U.S. dollars, and
holders' right, if any, to elect payment in a foreign currency or
foreign currency unit other than that in which the debt
securities are payable;
- whether and to what extent the debt securities are subject to
defeasance on terms different from those described under
"Defeasance of indenture"; and
- any other terms of the debt securities that are not inconsistent
with the indenture.
(section 301)
The Issuer may issue debt securities as original issue discount
("OID") debt securities. OID debt securities bear no interest or bear
interest at below-market rates and are sold at a discount below their
stated principal amount. If the Issuer issues OID debt securities, the
prospectus supplement or term sheet will contain the issue price, the
rate at which interest will accrete, and the date from which such
interest will accrete on the OID debt securities.
The Issuer may also issue indexed debt securities. Payments of
principal of, and premium and interest on, indexed debt securities are
determined with reference to the rate of exchange between the currency or
currency unit in which the debt security is denominated and any other
currency or currency unit specified by the Issuer, to the relationship
between two or more currencies or currency units or by other similar
methods or formulas specified in the prospectus supplement or term sheet.
Ranking
The debt securities will be unsecured and unsubordinated
obligations of the Issuer and will rank equally with all the Issuer's
other unsecured and unsubordinated debt. The guarantees will be unsecured
and unsubordinated obligations of the Guarantor and will rank equally
with all the Guarantor's other unsecured and unsubordinated debt.
Form and denomination
The prospectus supplement or term sheet will describe the form
which the debt securities and the guarantees will have, including
insertions, omissions, substitutions and other variations permitted by
10
the indenture and any legends required by any laws, rules or regulations.
(section 201)
The Issuer will issue debt securities in denominations of $1,000
and whole multiples thereof, unless the prospectus supplement or term
sheet states otherwise. (section 302)
Payment
The Issuer will pay principal of and premium and interest on its
registered debt securities at the place and time described in the debt
securities. The Issuer will pay installments of interest on any
registered debt security to the person in whose name the registered debt
security is registered at the close of business on the regular record
date for these payments. The Issuer will pay principal and premium on
registered debt securities only against surrender of these debt
securities. (section 1001). If the Issuer issues debt securities in
bearer form, the prospectus supplement or term sheet will describe where
and how payment will be made.
Material covenants
The indenture includes the following material covenants:
Lien on assets
If the Issuer mortgages, pledges or otherwise subjects to any lien
the whole or any part of any property or assets which it now owns or
acquires in the future, then the Issuer will secure the debt securities
to the same extent and in the same proportion as the debt or other
obligation that is secured by that mortgage, pledge or other lien. The
debt securities will remain secured for the same period as the other debt
remains secured. This restriction does not apply, however, to any of the
following:
- purchase-money mortgages or liens;
- liens on any property or asset that existed at the time when the
Issuer acquired that property or asset;
- any deposit or pledge to secure public or statutory obligations;
- any deposit or pledge with any governmental agency required to
qualify the Issuer to conduct its business, or any part of its
business, or to entitle it to maintain self-insurance or to
obtain the benefits of any law relating to workmen's
compensation, unemployment insurance, old age pensions or other
social security;
11
- any deposit or pledge with any court, board, commission or
governmental agency as security related to the proper conduct of
any proceeding before it;
- any mortgage, pledge or lien on any property or asset of any of
the Issuer's affiliates, even if the affiliate may have acquired
that property or asset from the Issuer;
- liens for taxes, assessments or governmental charges or levies
not yet delinquent or being contested in good faith by the
Issuer, if the Issuer has made appropriate reserves;
- liens of landlords and liens of mechanics and materialmen
incurred in the ordinary course of business for sums not yet due
or being contested in good faith by the Issuer, if the Issuer has
made appropriate reserves;
- leases or subleases which the Issuer has granted to others in the
ordinary course of business;
- easements, rights-of-way, restrictions and other similar
encumbrances which the Issuer has incurred in the ordinary course
of business and which do not interfere with the ordinary conduct
of the Issuer's business;
- liens incurred in connection with the issuance by a state or a
political subdivision of a state of any securities the interest
on which is exempt from federal income taxes under Section 103 of
the Internal Revenue Code or any other laws or regulations in
effect at the time of the issuance; or
- liens for the sole purpose of extending, renewing or replacing
all or a part of the indebtedness secured by any lien referred to
in the foregoing clauses or in this clause.
(section 1007)
Limitation on merger, consolidation and sales of assets
Neither the Issuer nor the Guarantor may consolidate with or merge
into any other entity or transfer or lease substantially all of its
properties and assets to any person unless:
- the successor is organized under the laws of the United States or
a state thereof;
- the successor assumes by supplemental indenture the obligations
of its predecessor (that is, all the Issuer's obligations under
the debt securities and the indenture or all the Guarantor's
obligations under the guarantees and the indenture); and
12
- after giving effect to the transaction, there is no default under
the indenture.
The surviving transferee or lessee corporation will be the Issuer's
or the Guarantor's successor, and the Issuer will be relieved of all
obligations under the debt securities and the indenture or the Guarantor
will be relieved of all obligations under the guarantees and the
indenture. (sections 801 and 802)
Registration of transfer and exchange
All debt securities issued upon any registration of transfer or
exchange of debt securities will be valid obligations of the Issuer,
evidencing the same debt and entitled to the same rights under the
indenture and the guarantees as the debt securities surrendered in the
registration of transfer or exchange.
Registration of transfer
Holders of registered debt securities may present their securities
for registration of transfer at the office of one or more security
registrars designated and maintained by the Issuer. (section 305)
The Issuer will not be required to register the transfer of or
exchange debt securities under the following conditions:
- The Issuer will not be required to register the transfer of or
exchange any debt securities during a period of 15 days before
any selection of those debt securities to be redeemed.
- The Issuer will not be required to register the transfer of or
exchange any debt securities selected for redemption, in whole or
in part, except the unredeemed portion of any debt securities
being redeemed in part.
- The Issuer will not be required to register the transfer of or
exchange debt securities of any holder who has exercised an
option to require the repurchase of those debt securities prior
to their stated maturity date, except the portion not being
repurchased.
(section 305)
Exchange
At your option, you may exchange your registered debt securities of
any series (except a global security, as set forth below) for an equal
principal amount of other registered debt securities of the same series
having authorized denominations upon surrender to the designated agency
of the Issuer.
13
The Issuer may at any time exchange debt securities issued as one
or more global securities for an equal principal amount of debt
securities of the same series in definitive registered form. In this case
the Issuer will deliver to the holders new debt securities in definitive
registered form in the same aggregate principal amount as the global
securities being exchanged.
The depositary of the global securities may also decide at any time
to surrender one or more global securities in exchange for debt
securities of the same series in definitive registered form, in which
case the Issuer will deliver the new debt securities in definitive form
to the persons specified by the depositary, in an aggregate principal
amount equal to, and in exchange for, each person's beneficial interest
in the global securities. (section 305)
Notwithstanding the above, the Issuer will not be required to
exchange any debt securities if, as a result of the exchange, the Issuer
would suffer adverse consequences under any United States law or
regulation. (section 305)
Global securities
If the Issuer decides to issue debt securities in the form of one
or more global securities, then the Issuer will register the global
securities in the name of the depositary for the global securities or the
nominee of the depositary and the global securities will be delivered by
the trustee to the depositary for credit to the accounts of the holders
of beneficial interests in the debt securities.
The prospectus supplement or term sheet will describe the specific
terms of the depositary arrangement for debt securities of a series that
are issued in global form. None of the Issuer, the trustee, any paying
agent or the security registrar will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a global debt security or for
maintaining, supervising or reviewing any records relating to these
beneficial ownership interests.
Defeasance of indenture
The Issuer and the Guarantor can terminate all of their obligations
under the Indenture with respect to the debt securities and the
guarantees, other than the obligation to pay interest on and the
principal of the debt securities and certain other obligations, at any
time by:
- depositing money or U.S. government obligations with the trustee
in an amount sufficient to pay the principal of and interest on
the debt securities to their maturity; and
14
- complying with certain other conditions, including delivery to
the trustee of an opinion of counsel to the effect that holders
of debt securities will not recognize income, gain or loss for
federal income tax purposes as a result of the Issuer's and the
Guarantor's defeasance.
In addition, the Issuer and the Guarantor can terminate all of
their obligations under the Indenture with respect to the debt securities
and the guarantees, including the obligation to pay interest on and the
principal of the debt securities, at any time by:
- depositing money or U.S. government obligations with the trustee
in an amount sufficient to pay the principal of and interest on
the debt securities to their maturity, and
- complying with certain other conditions, including delivery to
the trustee of an opinion of counsel stating that there has been
a ruling by the Internal Revenue Service, or a change in the
federal tax law since the date of the indenture, to the effect
that holders of debt securities will not recognize income, gain
or loss for federal income tax purposes as a result of the
Issuer's and the Guarantor's defeasance.
(sections 402-404)
Payments of unclaimed moneys
Moneys deposited with the trustee or any paying agent for the
payment of principal of or premium and interest on any debt security that
remain unclaimed for two years will be repaid to the Issuer at the
Issuer's request, unless the law requires otherwise. If this happens and
you want to claim these moneys, you must look to the Issuer and not to
the trustee or paying agent. (section 409)
Events of default, notices, and waiver
Events of default
An "event of default" regarding any series of debt securities is
any one of the following events:
- default for 30 days in the payment of any interest installment
when due and payable;
- default in the payment of principal or premium when due at its
stated maturity, by declaration, when called for redemption or
otherwise;
- default in the performance of any covenant in the debt securities
or in the indenture by the Issuer or the Guarantor for 60 days
15
after notice to the Issuer and the Guarantor by the trustee or by
holders of 25% in principal amount of the outstanding debt
securities of that series;
- acceleration of debt securities of another series or any other
indebtedness for borrowed money of the Issuer or the Guarantor,
in an aggregate principal amount exceeding $10.0 million under
the terms of the instrument or instruments under which the
indebtedness is issued or secured, if the acceleration is not
annulled within 30 days after written notice as provided in the
indenture;
- certain events of bankruptcy, insolvency and reorganization of
the Issuer or the Guarantor; and
- any other event of default of that series that is specified in
the prospectus supplement or term sheet.
(section 501)
A default regarding a single series of debt securities will not
necessarily constitute a default regarding any other series.
If an event of default for any series of debt securities occurs and
is continuing (other than an event of default involving the bankruptcy,
insolvency or reorganization of the Issuer or Guarantor), either the
trustee or the holders of 25% in principal amount of the outstanding debt
securities of that series may declare the principal (or, in the case of
(a) OID debt securities, a lesser amount as provided in those OID debt
securities or (b) indexed debt securities, an amount determined by the
terms of those indexed debt securities), of all the debt securities of
that series, together with any accrued interest on the debt securities,
to be immediately due and payable by notice in writing to the Issuer and
the Guarantor. If it is the holders of debt securities who give notice of
that declaration of acceleration to the Issuer and the Guarantor, then
they must also give notice to the trustee. (section 502)
If an event of default occurs which involves the bankruptcy,
insolvency or reorganization of the Issuer or the Guarantor, as set forth
above, then all unpaid principal amounts (or, if the debt securities are
(a) OID debt securities, then the portion of the principal amount that is
specified in those OID debt securities or (b) indexed debt securities, an
amount determined by the terms of those indexed debt securities) and
accrued interest on all debt securities of each series will immediately
become due and payable, without any action by the trustee or any holder
of debt securities. (section 502)
In order for holders of debt securities to initiate proceedings for
a remedy under the indenture, 25% in principal amount must first give
notice to the Issuer and the Guarantor as provided above, must request
that the trustee initiate a proceeding in its own name and must offer the
trustee a reasonable indemnity against costs and liabilities. If the
trustee still refuses for 60 days to initiate the proceeding, and no
16
inconsistent direction has been given to the trustee by holders of a
majority of the debt securities of the same series, the holders may
initiate a proceeding as long as they do not adversely affect the rights
of any other holders of that series. (section 507)
The holders of a majority in principal amount of the outstanding
debt securities of a series may rescind a declaration of acceleration if
all events of default, besides the failure to pay principal or interest
due solely because of the declaration of acceleration, have been cured or
waived. (section 502)
If the Issuer or the Guarantor defaults on the payment of any
installment of interest and fails to cure the default within 30 days, or
if the Issuer or the Guarantor defaults on the payment of principal when
it becomes due, then the trustee may require the Issuer or the Guarantor
to pay all amounts due to the trustee, with interest on the overdue
principal or interest payments, in addition to the expenses of
collection. (section 503)
A judgment for money damages by courts in the United States,
including a money judgment based on an obligation expressed in a foreign
currency, will ordinarily be rendered only in U.S. dollars. New York
statutory law provides that a court shall render a judgment or decree in
the foreign currency of the underlying obligation and that the judgment
or decree shall be converted into U.S. dollars at the exchange rate
prevailing on the date of entry of the judgment or decree. The indenture
requires the Issuer to pay additional amounts necessary to protect
holders if a court requires a conversion to be made on a date other than
a judgment date.
Notices
The trustee is required to give notice to holders of a series of
debt securities of a default, which remains uncured or has not been
waived, that is known to the trustee within 90 days after the default has
occurred. In the event of a default in the performance of any covenant in
the debt securities or the indenture which results under the indenture in
notice to the Issuer and the Guarantor by the trustee after 90 days, the
trustee shall not give notice to the holders of debt securities until 60
days after the giving of notice to the Issuer and the Guarantor. The
trustee may not withhold the notice in the case of a default in the
payment of principal of and premium or interest on any of the debt
securities. (section 602)
Waiver
The holders of a majority in principal amount of the outstanding
debt securities of a series may waive any past default or event of
default except a default in the payment of principal of or premium or
interest on the debt securities of that series or a default relating to a
17
provision that cannot be amended without the consent of each affected
holder. (section 513)
Reports
The Issuer and the Guarantor are each required to file every year
with the trustee an officer's certificate confirming that it is complying
with all conditions and covenants in the indenture. (section 1005)
The Issuer and the Guarantor must each file with the trustee copies
of the annual reports and of the information and other documents which
the Issuer and the Guarantor may be required to file with the SEC under
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended. These documents must be filed with the trustee within 15 days
after they are required to be filed with the SEC. If either the Issuer or
the Guarantor is not required to file the information, documents or
reports under either of these Sections, then the Issuer or the Guarantor
must file with the trustee and the SEC, in accordance with the rules and
regulations of the SEC, the supplementary and periodic information,
documents and reports which may be required by Section 13 of the Exchange
Act, in respect of a debt security listed and registered on a national
securities exchange, as may be required by the rules and regulations of
the SEC.
Within 30 days of filing the information, documents or reports
referred to above with the trustee, the Issuer and the Guarantor must
mail to the holders of the debt securities any summaries of the
information, documents or reports which are required to be sent to the
holders by the rules and regulations of the SEC. (section 704)
Rights and duties of the trustee
The holders of a majority in principal amount of outstanding debt
securities of any series may direct the time, method and place of
conducting any proceeding for any remedy available to the trustee or
exercising any trust or other power conferred on the trustee. The trustee
may decline to follow that direction if it would involve the trustee in
personal liability or would be illegal. (section 512) During a default,
the trustee is required to exercise the standard of care and skill that a
prudent man would exercise under the circumstances in the conduct of his
own affairs. (section 601) The trustee is not obligated to exercise any
of its rights or powers under the indenture at the request or direction
of any of the holders of debt securities unless those holders have
offered to the trustee reasonable security or indemnity. (section 603)
The trustee is entitled, in the absence of bad faith on its part,
to rely on an officer's certificate of the Issuer or the Guarantor before
taking action under the indenture. (section 603)
18
Supplemental indentures
Supplemental indentures not requiring consent of holders
Without the consent of any holders of debt securities, the Issuer,
the Guarantor and the trustee may supplement the indenture, among other
things, to:
- pledge property to the trustee as security for the debt
securities;
- reflect that another entity has succeeded the Issuer or the
Guarantor and assumed the covenants and obligations of the Issuer
under the debt securities and the indenture or of the Guarantor
under the guarantees and the indenture;
- cure any ambiguity or inconsistency in the indenture or in the
debt securities or the guarantees or make any other provisions
the Issuer and the Guarantor consider necessary or desirable, as
long as the interests of the holders of the debt securities are
not adversely affected in any material respect;
- issue and establish the form and terms of any series of debt
securities or the guarantees as provided in the indenture;
- add to the covenants of the Issuer or the Guarantor further
covenants for the benefit of the holders of debt securities (and
if the covenants are for the benefit of less than all series of
debt securities, stating which series are entitled to benefit);
- add any additional event of default (and if the new event of
default applies to fewer than all series of debt securities,
stating to which series it applies);
- change the trustee or provide for an additional trustee;
- provide additional provisions for bearer debt securities so long
as the action does not adversely affect the interests of holders
of any debt securities in any material respect; or
- modify the indenture in order to continue its qualification under
the Trust Indenture Act of 1939 or as may be necessary or
desirable in accordance with amendments to that Act.
(section 901)
Supplemental indentures requiring consent of holders
With the consent of the holders of at least a majority in principal
amount of the series of the debt securities that would be affected by a
19
modification of the indenture, the indenture permits the Issuer, the
Guarantor and the trustee to supplement the indenture or modify in any
way the terms of the indenture or the rights of the holders of the debt
securities. However, without the consent of each holder of all of the
debt securities affected by that modification, the Issuer, the Guarantor
and trustee may not:
- reduce the principal of or premium on or change the stated final
maturity of any debt security;
- reduce the rate of or change the time for payment of interest on
any debt security (or, in the case of OID debt securities, reduce
the rate of accretion of the OID);
- change any obligation of the Issuer or the Guarantor to pay
additional amounts under the indenture;
- reduce or alter the method of computation of any amount payable
upon redemption, repayment or purchase of any debt security by
the Issuer or the Guarantor (or the time when the redemption,
repayment or purchase may be made);
- make the principal or interest on any debt security payable in a
currency other than that stated in the debt security or change
the place of payment;
- reduce the amount of principal due on an OID debt security upon
acceleration of maturity or provable in bankruptcy or reduce the
amount payable under the terms of an indexed debt security upon
acceleration of maturity or provable in bankruptcy;
- impair any right of repayment or purchase at the option of any
holder of debt securities;
- modify the right of any holder of debt securities to receive or
sue for payment of the principal or interest on a debt security
that would be due and payable at the maturity thereof or upon
redemption;
- modify the Guarantor's obligation under the guarantees to pay all
amounts due under the debt securities in any way adverse to the
interest of any holders of debt securities; or
- reduce the principal amount of the outstanding debt securities of
any series required to supplement the indenture or to waive any
of its provisions.
(section 902)
A supplemental indenture which modifies or eliminates a provision
intended to benefit the holders of one series of debt securities will not
affect the rights under the indenture of holders of other series of debt
securities.
20
Redemption
The specific terms of any redemption of a series of debt securities
will be contained in the prospectus supplement or term sheet for that
series. Generally, the Issuer must send notice of redemption to the
holders at least 30 days but not more than 60 days prior to the
redemption date. The notice will specify:
- the principal amount being redeemed;
- the redemption date;
- the redemption price;
- the place or places of payment;
- the CUSIP number of the debt securities being redeemed;
- whether the redemption is pursuant to a sinking fund;
- that on the redemption date, interest (or, in the case of OID
debt securities, original issue discount) will cease to accrue;
and
- if bearer debt securities are being redeemed, that those bearer
debt securities must be accompanied by all coupons maturing after
the redemption date or the amount of the missing coupons will be
deducted from the redemption price, or indemnity must be
furnished, and whether those bearer debt securities may be
exchanged for registered debt securities not being redeemed.
(section 1104)
On or before any redemption date, the Issuer or the Guarantor will
deposit an amount of money with the trustee or with a paying agent
sufficient to pay the redemption price. (section 1103)
If less than all the debt securities are being redeemed, the
trustee shall select the debt securities to be redeemed using a method it
considers fair. (section 1103) After the redemption date, holders of debt
securities which were redeemed will have no rights with respect to the
debt securities except the right to receive the redemption price and any
unpaid interest to the redemption date. (section 1106)
Description of the Guarantees
The Guarantor has unconditionally guaranteed to each holder of debt
securities and to the trustee and its successors the due and punctual
payment of the principal of and premium, if any, and interest, if any, on
the debt securities. The guarantees apply whether the payment is due at
21
the maturity date of the debt securities, on an interest payment date,
or as a result of acceleration, an offer to purchase or otherwise. The
guarantees include payment of interest on the overdue principal of and
interest, if any, on the debt securities (if lawful) and all other
obligations of the Issuer under the indenture.
The guarantees will remain valid even if the indenture is found to
be invalid. The Guarantor is obligated under the guarantees to pay any
guaranteed amount immediately after the Issuer's failure to do so.
The Guarantor is a holding company with no independent business
operations or source of income of its own. It conducts substantially all
of its operations through its subsidiaries and, as a result, the
Guarantor depends on the earnings and cash flow of, and dividends or
distributions from, its subsidiaries to provide the funds necessary to
meet its debt and contractual obligations. Furthermore, a substantial
portion of the Guarantor's consolidated assets, earnings and cash flow is
derived from the operation of its regulated utility subsidiaries, whose
legal authority to pay dividends or make other distributions to the
Guarantor is subject to regulation by the State of New York Public
Service Commission. In addition, upon consummation of the merger with
Eastern Enterprises, the Guarantor expects to register as a holding
company under the Public Utility Holding Company Act of 1935, as amended.
As a result, the corporate and financial activities of the Guarantor and
each of its subsidiaries (including their ability to pay dividends to the
Guarantor) will be subject to regulation by the SEC.
The Guarantor's holding company status also means that the right of
the Guarantor to participate in any distribution of the assets of any of
its subsidiaries upon liquidation, reorganization or otherwise is subject
to the prior claims of the creditors of each of the subsidiaries (except
to the extent that the claims of the Guarantor itself as a creditor of a
subsidiary may be recognized). Since this is true for the Guarantor, it
is also true for the creditors of the Guarantor (including the holders of
the debt securities). The right of the Guarantor's creditors (including
the holders of the debt securities) to participate in the distribution
of the stock owned by the Guarantor in its regulated subsidiaries would
also be subject to approval by the State of New York Public Service
Commission and the Federal Energy Regulatory Commission.
Concerning the Trustee
We have customary banking relationships with the trustee, The Chase
Manhattan Bank. Among other services, The Chase Manhattan Bank provides
us with cash management and credit services, including payroll account,
lockbox, foreign exchange and investment custody account services. The
Chase Manhattan Bank also serves or has served as administrative agent
and trustee with respect to several other loans and issuances of debt of
the Guarantor or its subsidiaries and is a member of a syndicate of banks
22
which is party to a $700 million line of credit facility with the
Guarantor. In addition, Chase Securities Inc., an affiliate of The Chase
Manhattan Bank, acts as a placement agent for a commercial paper program
which the Guarantor initiated in November 1999.
Governing Law
The laws of the State of New York govern the indenture and will
govern the debt securities and the guarantees. (section 112)
PLAN OF DISTRIBUTION
The Issuer may sell the debt securities in any of three ways:
- through underwriters or dealers;
- through agents; or
- directly to purchasers.
The prospectus supplement or term sheet for each series of debt
securities will describe that offering, including:
- the name or names of any underwriters, dealers or agents;
- the purchase price and the proceeds to the Issuer from that sale;
- any underwriting discounts and other items constituting
underwriters' compensation;
- any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers; and
- any securities exchanges on which the debt securities of that
series may be listed.
Underwriters
If underwriters are used in the sale, we will execute an
underwriting agreement with those underwriters. Unless otherwise set
forth in the prospectus supplement or term sheet, the obligations of the
underwriters to purchase debt securities will be subject to certain
conditions. The underwriters will be obligated to purchase all the debt
securities of a series if any are purchased.
The debt securities will be acquired by the underwriters for their
own account and may be resold by them from time to time in one or more
transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale.
23
Underwriters may be deemed to have received compensation from us in the
form of underwriting discounts or commissions and may also receive
commissions from the purchasers of debt securities for whom they may act
as agent. Underwriters may also sell debt securities to or through
dealers. These dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from
the purchasers for whom they may act as agent. Any initial public
offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The Issuer may authorize underwriters to solicit offers by certain
types of institutions to purchase debt securities from us at the public
offering price stated in the prospectus supplement or term sheet required
by delayed delivery contracts providing for payment and delivery on a
specified date in the future. If the Issuer sells debt securities under
these delayed delivery contracts, the prospectus supplement or term sheet
will state that as well as the conditions to which these delayed delivery
contracts will be subject and the commissions payable for that
solicitation.
Agents
The Issuer may also sell debt securities through agents designated
by us from time to time. We will name any agents involved in the offer or
sale of the debt securities and will list commissions payable by the
Issuer to these agents in the prospectus supplement or term sheet. These
agents will be acting on a best efforts basis to solicit purchases for
the period of their appointment, unless we state otherwise in the
prospectus supplement or term sheet.
Direct sales
The Issuer may sell debt securities directly to purchasers. In this
case, the Issuer will not engage underwriters or agents in the offer and
sale of debt securities.
Remarketing transactions
The Issuer may also sell debt securities that we have purchased,
redeemed or repaid through one or more remarketing firms acting as
principals for their own accounts or as our agents. The applicable
prospectus supplement or term sheet will identify any remarketing firms
and describe the terms of our agreement with them and their compensation.
Remarketing firms may be deemed to be underwriters of the debt securities
under the Securities Act of 1933, as amended.
24
Indemnification
We may indemnify underwriters, dealers or agents who participate in
the distribution of debt securities against certain liabilities,
including liabilities under the Securities Act, and agree to contribute
to payments which these underwriters, dealers or agents may be required
to make.
No assurance of liquidity
Each series of debt securities will be a new issue of securities
with no established trading market. Any underwriters that purchase debt
securities from the Issuer may make a market in these debt securities.
The underwriters will not be obligated, however, to make a market in the
debt securities and may discontinue market-making at any time without
notice to holders of debt securities. We cannot assure you that there
will be liquidity in the trading market for any debt securities of any
series.
LEGAL OPINIONS
The validity of the debt securities offered by the Issuer and the
guarantees offered by the Guarantor in this prospectus will be passed
upon for the Issuer and the Guarantor by Steven L. Zelkowitz, Senior Vice
President and Deputy General Counsel of the Guarantor. Mr. Zelkowitz has
been granted options to purchase up to 146,000 shares of common stock of
the Guarantor. Certain other legal matters will be passed upon for the
Issuer and the Guarantor by Dickstein Shapiro Morin & Oshinsky LLP,
Washington, D.C., or other counsel identified in the prospectus
supplement or term sheet. Frederick M. Lowther, a partner of Dickstein
Shapiro Morin & Oshinsky LLP, serves as the General Counsel of the
Guarantor and has been granted options to purchase up to 45,000 shares of
the Guarantor's common stock. In addition, other Dickstein Shapiro Morin
& Oshinsky LLP attorneys may be deemed to be beneficial owners of the
Guarantor's common stock having a fair market value of approximately
$50,000. Certain legal matters will be passed upon for any agents or
underwriters by Simpson Thacher & Bartlett, New York, New York, or other
counsel identified in the prospectus supplement or term sheet. Simpson
Thacher & Bartlett also acts as counsel for us from time to time.
EXPERTS
Arthur Andersen LLP, independent accountants, audited certain
financial statements for the nine months ended December 31, 1998 and
related schedules incorporated by reference in this prospectus and
elsewhere in the registration statement. These documents are incorporated
by reference herein in reliance upon the authority of Arthur Andersen
LLP, as experts in accounting and auditing in giving the report.
25
Ernst & Young LLP, independent auditors, have audited the financial
statements of Long Island Lighting Company as of March 31, 1998 and for
the twelve months ended March 31, 1998, the three months ended March 31,
1997 and the twelve months ended December 31, 1996 and related schedule
included in our Annual Report on Form 10-K, as amended, for the
Transition Period from April 1, 1998 to December 31, 1998, as set forth
in their Report, which is incorporated by reference, in this prospectus
and elsewhere in the registration statement. These financial statements
and schedule are incorporated by reference herein in reliance upon Ernst
& Young LLP's report, given upon their authority, as experts in
accounting and auditing.
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of
the debt securities and the guarantees being registered, other than the
underwriting discounts and commissions, are as follows:
Securities and Exchange Commission
Registration Fee $166,800
Legal Fees and Expenses $200,000
Accountants Fees and Expenses $120,000
Trustee Fees and Expenses $ 15,000
Rating Agency Fees $250,000
Printing and Delivery Expenses $ 20,000
Miscellaneous Expenses $ 3,200
Total<F1> $775,000
[FN]
<F1> Estimated
Item 15. Indemnification of Directors and Officers.
The New York Business Corporation Law ("BCL"), Article 7, Sections
721-726 provide for the indemnification and advancement of expenses to
officers and directors. Section 721 provides that indemnification and
advancement pursuant to the BCL are not exclusive of any other rights an
officer or director may be entitled to, provided that no indemnification
may be made to or on behalf of any director or officer if a judgment or
other final adjudication adverse to the director or officer establishes
that his acts were committed in bad faith or were the result of active
and deliberate dishonesty and were material to the cause of action so
adjudicated, or that the director personally gained a financial profit or
other advantage to which he was not legally entitled.
Section 722 of the BCL provides that a corporation may indemnify an
officer or director, in the case of third party actions, against
judgments, fines, amounts paid in settlement and reasonable expenses and,
in the case of derivative actions, against amounts paid in settlement and
reasonable expenses, provided that the director or officer acted in good
faith, for a purpose which he reasonably believed to be in the best
interests of the corporation and, in the case of criminal actions, had no
reasonable cause to believe his conduct was unlawful. In addition,
statutory indemnification may not be provided in derivative actions (i)
which are settled or otherwise disposed of or (ii) in which the director
or officer is adjudged liable to the corporation, unless and only to the
extent a court determines that the person is fairly and reasonably
entitled to indemnity.
Section 723 of the BCL provides that statutory indemnification is
mandatory where the director or officer has been successful, on the
II-1
merits or otherwise, in the defense of a civil or criminal action or
proceeding. Section 723 also provides that expenses of defending a civil
or criminal action or proceeding may be advanced by the corporation upon
receipt of an undertaking to repay them if and to the extent the
recipient is ultimately found not to be entitled to indemnification.
Section 725 provides for repayment of such expenses when the recipient is
ultimately found not to be entitled to indemnification. Section 726
provides that a corporation may obtain indemnification insurance
indemnifying itself and its directors and officers. The Issuer and the
Guarantor have in effect insurance policies providing both directors and
officers liability coverage and corporate reimbursement coverage.
Section 402(b) of the BCL provides that a corporation may include
in its certificate of incorporation a provision limiting or eliminating,
with certain exceptions, the personal liability of directors to a
corporation or its shareholders for damages for any breach of duty in
such capacity. The certificate of incorporation of both the Issuer and
the Guarantor contain provisions eliminating the personal liability of
Directors to the extent permitted by New York law.
The Issuer's and the Guarantor's certificates of incorporation
provide generally that they shall, except to the extent expressly
prohibited by the BCL, indemnify each of their officers and directors
made or threatened to be made a party to any action, suit or proceeding,
or appeal thereof, whether civil or criminal by reason of the fact that
such person is or was an officer or director against all expense,
liability and loss (including, but not limited to all attorneys' fees,
judgments, fines, pension plan taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith. The certificates of incorporation further provide
for advancement and reimbursement of such expenses incurred by an officer
or director in defending any action or proceeding in advance of the final
disposition thereof upon receipt of an undertaking by such person to
repay such amount if, and to the extent that, such person is ultimately
found not to be entitled to indemnification.
Item 16. List of Exhibits.
See Exhibit Index
Item 17. Undertakings.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
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the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the Registration Statement is on Form S-3, Form S-8, or
Form F-3 and the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Securities and Exchange
Commission by the Guarantor pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Guarantor's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of such registrants pursuant to the provisions
referred to in Item 15 of this registration statement, or otherwise, such
registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
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expressed in such Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by such registrants of expenses incurred or paid by a director,
officer or controlling person of such registrants in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, such registrants will, unless in the opinion of their counsel
the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, KeySpan Gas
East Corporation, one of the registrants, certifies that it has
reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this registration statement
amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Brooklyn, State of New York, on the 19th day
of January , 2000.
KEYSPAN GAS EAST CORPORATION
Issuer of Securities
(Registrant)
By: /s/ Ann C. Jordan
Anne C. Jordan
Vice President and Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement amendment has been signed below by the following
persons in the capacities and on the dates indicated.
Signatures and Titles Date
* January 19, 2000
- ------------------------
Robert J. Fani
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Ann C. Jordan January 19, 2000
- ------------------------
Anne C. Jordan
Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Paul R. Nick January 19, 2000
- ------------------------
Paul R. Nick
Controller and Chief Accounting Officer
(Principal Accounting Officer)
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*
- ------------------------ January 19, 2000
Robert J. Fani
Director
*
- ------------------------ January 19, 2000
George B. Jongeling
Director
*By: /s/ Paul R. Nick January 19, 2000
Paul R. Nick, as Attorney-In-Fact
Controller and Chief Accounting Officer
___________________
* Such signature has been affixed pursuant to a power of attorney filed
as an exhibit hereto.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, KeySpan
Corporation, one of the registrants, certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this registration statement amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Brooklyn, State of New York, on the 19th day of January,
2000.
KEYSPAN CORPORATION
Guarantor of Securities
(Registrant)
By:/s/ Gerald Luterman
- ------------------------
Gerald Luterman
Chief Financial Officer and Senior Vice-President
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement amendment has been signed below by the following
persons in the capacities and on the dates indicated.
Signatures and Titles: Date
* January 19, 2000
- ------------------------
Robert B. Catell
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Gerald Luterman January 19, 2000
- ------------------------
Gerald Luterman
Chief Financial Officer and Senior Vice-President
(Principal Financial Officer)
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/s/ Ronald Jendras January 19, 2000
- ------------------------
Ronald Jendras
Vice President, Controller and Chief Accounting
Officer
(Principal Accounting Officer)
* January 19, 2000
- ------------------------
Lilyan H. Affinito
Director
* January 19, 2000
- ------------------------
George Bugliarello
Director
* January 19, 2000
- ------------------------
Howard R. Curd
Director
* January 19, 2000
- ------------------------
Richard N. Daniel
Director
* January 19, 2000
- ------------------------
Donald H. Elliott
Director
* January 19, 2000
- ------------------------
Alan H. Fishman
Director
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* January 19, 2000
- ------------------------
James R. Jones
Director
* January 19, 2000
- ------------------------
Stephen W. McKessy
Director
* January 19, 2000
- ------------------------
Edward D. Miller
Director
* January 19, 2000
- ------------------------
Basil A. Paterson
Director
* January 19, 2000
- ------------------------
James Q. Riordan
Director
* January 19, 2000
- ------------------------
Frederic V. Salerno
Director
* January 19, 2000
- ------------------------
Vincent Tese
Director
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/s/ Ronald Jendras January 19, 2000
- ------------------------
Ronald Jendras, as Attorney-in-Fact
Vice President, Controller and Chief Accounting
Officer
_______________
* Such signature has been affixed pursuant to a power of attorney filed
as an exhibit hereto.
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Exhibit Number Description of Exhibits
1<F1> Form of Distribution Agreement
2<F2> Agreement and Plan of Merger, dated as of November 4, 1999,
by and among KeySpan Corporation, Eastern Enterprises and
ACJ Acquisition LLC (filed as Exhibit 2 to KeySpan's Current
Report on Form 8-K dated November 5, 1999 and incorporated
herein by reference)
4-a<F1> Form of Indenture, dated as of December 1, 1999, between the
registrants and The Chase Manhattan Bank, as trustee. The
form or forms of debt security with respect to each
particular series of debt securities registered hereunder
(other than Medium-Term Notes) will be filed as an exhibit
to a Current Report on Form 8-K and shall be deemed to be
incorporated herein by reference.
4-b<F1> Form of Medium-Term Notes
5<F1> Opinion of Steven L. Zelkowitz as to the legality of the
debt securities to be issued
12<F2> Computation of ratio of earnings to fixed charges
23-a<F1> Consent of Arthur Andersen, LLP, Independent Accountants
23-b<F1> Consent of Ernst & Young, LLP, Independent Auditors
23-c<F1> Consent of Steven L. Zelkowitz (contained in his Opinion
filed as Exhibit 5 hereto)
24-a<F1> Powers of Attorney
24-b<F2> Certified resolution of the Board of Directors of KeySpan
Corporation authorizing signatures pursuant to power of
attorney
24-c<F2> Certified resolution of the Board of Directors of KeySpan
Gas East Corporation authorizing signatures pursuant to
power of attorney
25<F1> Statement of Eligibility of The Chase Manhattan Bank on Form
T-1
__________________
[FN]
<F1> Filed herewith.
<F2> Previously filed.
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