Filed pursuant to Rule 424(b)(5)
Registration Statement Nos. 333-85218 and
333-85218-01 and 333-102173, 333-102173-01,
333-102173-02 and 333-102173-03
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED APRIL 3, 2003)
$500,000,000
[FPL GROUP CAPITAL INC LOGO]
3 1/4% DEBENTURES, SERIES DUE APRIL 11, 2006
THE DEBENTURES WILL BE ABSOLUTELY, IRREVOCABLY AND
UNCONDITIONALLY GUARANTEED BY
FPL GROUP, INC.
-----------------
FPL Group Capital Inc will pay interest, in cash, on these securities
on April 11 and October 11 of each year, beginning October 11, 2003. FPL Group
Capital may not redeem these securities at its option before their maturity.
FPL Group Capital's corporate parent, FPL Group, Inc., has agreed to
absolutely, irrevocably and unconditionally guarantee the payment of principal,
interest and premium on these securities. These securities are unsecured and
rank equally with FPL Group Capital's other unsecured indebtedness. FPL Group
Capital does not plan to list these securities on any securities exchange.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THE ACCOMPANYING PROSPECTUS
TO READ ABOUT CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE MAKING AN INVESTMENT IN
THESE SECURITIES.
Both FPL Group Capital's and FPL Group's principal executive offices
are located at 700 Universe Boulevard, Juno Beach, Florida 33408, telephone
number (561) 694-4000, and their mailing address is P.O. Box 14000, Juno Beach,
Florida 33408-0420.
-----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement and the accompanying prospectus are truthful or complete.
Any representation to the contrary is a criminal offense.
-----------------
PER DEBENTURE TOTAL
------------- -----
Public Offering Price (1)................................... 99.918% $499,590,000
Underwriting Discount....................................... 0.350% $1,750,000
Proceeds to FPL Group Capital (before expenses)............. 99.568% $497,840,000
<FN>
(1) Plus accrued interest from April 11, 2003, if settlement is after that date
</FN>
These securities are expected to be delivered to the underwriters in
book-entry only form through The Depository Trust Company and its participants,
on or about April 11, 2003.
-----------------
JPMORGAN MORGAN STANLEY
LEHMAN BROTHERS MERRILL LYNCH & CO. SCOTIA CAPITAL
-----------------
The date of this prospectus supplement is April 8, 2003.
THE ACCOMPANYING PROSPECTUS IS PART OF A REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE INFORMATION
INCORPORATED BY REFERENCE OR PROVIDED IN THIS PROSPECTUS SUPPLEMENT AND IN THE
ACCOMPANYING PROSPECTUS. NEITHER FPL GROUP CAPITAL NOR FPL GROUP HAS AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH ADDITIONAL OR DIFFERENT INFORMATION. NEITHER FPL
GROUP CAPITAL NOR FPL GROUP IS MAKING AN OFFER OF THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT OR IN THE ACCOMPANYING PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS OR
THAT THE INFORMATION INCORPORATED BY REFERENCE IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE OF THE DOCUMENT INCORPORATED BY REFERENCE.
-------------------------
TABLE OF CONTENTS
Page
----
PROSPECTUS SUPPLEMENT
Use of Proceeds..............................................................................................S-3
Consolidated Capitalization of FPL Group and Subsidiaries....................................................S-3
Certain Terms of the Debentures..............................................................................S-3
Underwriting.................................................................................................S-6
Legal Opinions...............................................................................................S-7
PROSPECTUS
About this Prospectus..........................................................................................2
Risk Factors...................................................................................................3
FPL Group Capital..............................................................................................5
FPL Group .....................................................................................................6
FPL Group Capital Trust I and FPL Group Capital Trust II.......................................................6
Use of Proceeds................................................................................................6
Consolidated Ratio of Earnings to Fixed Charges................................................................6
Where You Can Find More Information ...........................................................................7
Incorporation By Reference.....................................................................................7
Cautionary Statements .........................................................................................7
Description of Offered Debt Securities.........................................................................8
Description of the Debt Securities Guarantee..................................................................18
Description of Common Stock ..................................................................................20
Description of Stock Purchase Contracts and Stock Purchase Units .............................................24
Description of Preferred Trust Securities ....................................................................24
Description of the Preferred Trust Securities Guarantee.......................................................32
Description of the Junior Subordinated Debentures and the Subordinated Guarantee..............................35
Information Concerning the Trustees...........................................................................50
Plan of Distribution .........................................................................................50
Experts.......................................................................................................51
Legal Opinions................................................................................................51
S-2
USE OF PROCEEDS
The information in this section adds to the information in the "Use of
Proceeds" section on page 6 of the accompanying prospectus. Please read these
two sections together.
The $500,000,000 aggregate principal amount of 3 1/4% Debentures,
Series due April 11, 2006 offered by this prospectus supplement and the
accompanying prospectus are referred to in this prospectus supplement as the
"Debentures."
FPL Group Capital will add the net proceeds from the sale of the
Debentures to its general funds. FPL Group Capital expects to use general funds
equal to the net proceeds to repay a portion of commercial paper issued to fund
investments by FPL Group Capital in independent power projects. As of December
31, 2002, FPL Group Capital had an aggregate of $1.1 billion of commercial paper
outstanding, which had maturities of up to 64 days and which had annual interest
rates ranging from 1.40% to 1.65%. FPL Group Capital will temporarily
invest in short-term instruments any proceeds that are not immediately used for
such repayment.
CONSOLIDATED CAPITALIZATION OF FPL GROUP AND SUBSIDIARIES
The following table shows FPL Group's consolidated capitalization as of
December 31, 2002, and as adjusted. This table, which is presented in this
prospectus supplement solely to provide limited introductory information, is
qualified in its entirety by, and should be considered in conjunction with, the
more detailed information incorporated by reference or provided in this
prospectus supplement or in the accompanying prospectus.
OUTSTANDING
AT ADJUSTED(a)
DECEMBER 31, 2002 AMOUNT PERCENT
----------------- ------------- ------------
(UNAUDITED)
(IN MILLIONS)
Common Shareholders' Equity................... $ 6,390 $ 6,390 47.7%
Long-term debt (excluding current
maturities)................................. $ 5,790 $ 6,790 50.6%
Preferred stock of Florida Power & Light
Company without sinking fund
requirements................................ $ 226 $ 226 1.7%
----------------- ------------- ------------
Total Capitalization..................... $12,406 $13,406 100.0%
================= ============= ============
<FN>
(a) To give effect to (i) the issuance of the Debentures offered by this
prospectus supplement, and (ii) the sale by Florida Power & Light Company, a
subsidiary of FPL Group, of $500 million of its First Mortgage Bonds, 5 5/8%
Series due April 1, 2034 on April 4, 2003. Adjusted amounts do not reflect
any possible future issuance and sale from time to time by FPL Group or its
subsidiaries, including FPL Group Capital, of additional securities.
</FN>
CERTAIN TERMS OF THE DEBENTURES
The information in this section adds to the information in the
"Description of Offered Debt Securities" section beginning on page 8 of the
accompanying prospectus. Please read these two sections together.
GENERAL. FPL Group Capital will issue the Debentures under the
Indenture, dated as of June 1, 1999, between FPL Group Capital and The Bank of
New York, as Indenture Trustee. An Officer's Certificate will supplement the
Indenture and establish the specific terms of the Debentures. Under the
Indenture, FPL Group Capital may issue an unlimited amount of additional debt
securities.
S-3
The Indenture Trustee will initially be the Security Registrar and the
Paying Agent for the Debentures. All transactions with respect to the
Debentures, including registration, transfer and exchange of the Debentures,
will be handled by the Security Registrar at an office in New York City
designated by FPL Group Capital. FPL Group Capital has initially designated the
Corporate Trust Office of the Indenture Trustee as that office. In addition,
holders of the Debentures should address any notices to FPL Group Capital
regarding the Debentures to that office. FPL Group Capital will notify holders
of the Debentures of any change in the location of that office.
INTEREST AND PAYMENT. FPL Group Capital will pay interest in cash on
the Debentures at the rate of 3 1/4% per annum. The Debentures will mature on
April 11, 2006. FPL Group Capital will pay interest on the Debentures on April
11 and October 11 of each year (each an "Interest Payment Date"). The first
Interest Payment Date for the Debentures will be October 11, 2003. The record
date for interest payable on the Debentures on any Interest Payment Date shall
be the close of business (1) on the business day immediately preceding such
Interest Payment Date so long as the Debentures remain in book-entry only form,
or (2) on the 15th calendar day before each Interest Payment Date if the
Debentures do not remain in book-entry only form. See "--Book-Entry Only
Issuance--The Depository Trust Company." Interest on the Debentures will accrue
from and including the date of original issuance to and excluding the first
Interest Payment Date. Starting on the first Interest Payment Date, interest on
each Debenture will accrue from and including the last Interest Payment Date to
which FPL Group Capital has paid, or duly provided for the payment of, interest
on that Debenture. No interest will accrue on a Debenture for the day that the
Debenture matures.
MANDATORY REDEMPTION. The following constitute "Guarantor Events" with
respect to the Debentures:
(1) the Guarantee Agreement, dated as of June 1, 1999, between FPL
Group, as Guarantor, and The Bank of New York, as Guarantee
Trustee, ceases to be in full force and effect;
(2) a court issues a decree ordering or acknowledging the bankruptcy
or insolvency of the Guarantor, or appointing a custodian,
receiver or other similar official for the Guarantor, or ordering
the winding up or liquidation of its affairs, and the decree
remains in effect for 90 days; or
(3) the Guarantor seeks or consents to relief under Federal or State
bankruptcy or insolvency laws, or to the appointment of a
custodian, receiver or other similar official for the Guarantor,
or makes an assignment for the benefit of its creditors, or
admits in writing that it is bankrupt or insolvent.
FPL Group Capital shall, if a Guarantor Event occurs and is continuing,
redeem all of the outstanding Debentures within 60 days after the occurrence of
the Guarantor Event at a redemption price equal to the principal amount thereof
plus accrued interest to the date of redemption unless, within 30 days after the
occurrence of the Guarantor Event, Standard & Poor's Ratings Services (a
Division of The McGraw Hill Companies, Inc.) and Moody's Investors Service, Inc.
(if the Debentures are then rated by those rating agencies, or, if the
Debentures are not then rated by those rating agencies but are then rated by one
or more other nationally recognized rating agencies, then at least one of those
other nationally recognized rating agencies) shall have reaffirmed in writing
that, after giving effect to such Guarantor Event, the credit rating on the
Debentures is investment grade (i.e. in one of the four highest categories,
without regard to subcategories within such rating categories, of such rating
agency).
If a Guarantor Event occurs and FPL Group Capital is not required to
redeem the Debentures as described above, FPL Group Capital will provide to the
Indenture Trustee and the holders of the Debentures annual and quarterly reports
containing the information that FPL Group Capital would be required to file with
the SEC under Section 13 or Section 15(d) of the Securities Exchange Act of 1934
if it were subject to the reporting requirements of those Sections. If FPL Group
Capital is, at that time, subject to the reporting requirements of those
Sections, the filing of annual and quarterly reports with the SEC pursuant to
those Sections will satisfy this requirement.
EVENTS OF DEFAULT. In addition to the events of default relating to any
series of debt securities issued under the Indenture, as set forth under the
"Description of Offered Debt Securities -- Events of Default" section on page 14
of the accompanying prospectus, each of the following events will be an event of
default under the Indenture with respect to the Debentures:
S-4
(1) the Guarantor consolidates with or merges into any other entity
or conveys, transfers or leases substantially all of its
properties and assets to any entity, unless
(a) the entity formed by such consolidation or into which the
Guarantor is merged, or the entity to which the Guarantor
conveys, transfers or leases substantially all of its
properties and assets is an entity organized and existing
under the laws of the United States of America, any State
thereof or the District of Columbia, and expressly assumes
the obligations of the Guarantor under the Guarantee
Agreement; and
(b) immediately after giving effect to such transaction, no
event of default under the Indenture and no event that,
after notice or lapse of time or both, would become an event
of default under the Indenture, shall have occurred and be
continuing; or
(2) FPL Group Capital fails to redeem any of the Debentures that it
is required to redeem as described under "Certain Terms of the
Debentures-- Mandatory Redemption" above.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY. The Debentures
will trade through DTC. The Debentures will be represented by one or more global
certificates and registered in the name of Cede & Co., DTC's nominee.
DTC is a New York clearing corporation and a clearing agency registered
under Section 17A of the Securities Exchange Act of 1934. DTC holds securities
for its participants. DTC also facilitates settlement of securities transactions
among its participants through electronic computerized book-entry changes in the
participants' accounts. This eliminates the need for physical movement of
securities certificates. The participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
corporations. DTC is a wholly-owned subsidiary of The Depository Trust &
Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of
participants of DTC, members of other clearing corporations and by the New York
Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Others who maintain a custodial
relationship with a participant can use the DTC system. The rules that apply to
DTC and those using its systems are on file with the Securities and Exchange
Commission.
Purchases of the Debentures within the DTC system must be made through
participants, which will receive a credit for the Debentures on DTC's records.
The beneficial ownership interest of each purchaser will be recorded on the
participants' records. Beneficial owners will not receive written confirmation
from DTC of their purchases, but beneficial owners should receive written
confirmations of the transactions, as well as periodic statements of their
holdings, from the participants through which they purchased Debentures.
Beneficial owners will not receive certificates for their Debentures, except if
use of the book-entry system for the Debentures is discontinued.
To facilitate subsequent transfers, all Debentures deposited by
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of the Debentures with DTC and their registration in the name of
Cede & Co. effects no change in beneficial ownership. DTC has no knowledge of
the actual beneficial owners of the Debentures. DTC's records reflect only the
identity of the participants to whose accounts such Debentures are credited.
These participants may or may not be the beneficial owners. Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to participants,
and by 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. Beneficial owners of Debentures may wish to take certain
steps to augment transmission to them of notices of significant events with
respect to the Debentures, such as redemptions, tenders and defaults.
Redemption notices will be sent to Cede & Co., as registered holder of
the Debentures. If less than all of the Debentures are being redeemed, DTC's
practice is to determine by lot the amount of Debentures of each participant to
be redeemed.
S-5
Neither DTC nor Cede & Co. will itself consent or vote with respect to
Debentures. Under its usual procedures, DTC would mail an omnibus proxy to FPL
Group Capital as soon as possible after the record date. The omnibus proxy
assigns the consenting or voting rights of Cede & Co. to those participants to
whose accounts the Debentures are credited on the record date. FPL Group Capital
believes that these arrangements will enable the beneficial owners to exercise
rights equivalent in substance to the rights that can be directly exercised by a
registered holder of the Debentures.
Payments of redemption proceeds, principal of, and interest on the
Debentures will be made to Cede & Co., or such other nominee as may be requested
by DTC. DTC's practice is to credit participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on that
payment date. Payments by participants to beneficial owners will be governed by
standing instructions and customary practices. Payments will be the
responsibility of participants and not of DTC, The Bank of New York (the
Indenture Trustee) or FPL Group Capital. Payment of redemption proceeds,
principal and interest to Cede & Co. (or such other nominee as may be requested
by DTC) is the responsibility of FPL Group Capital. Disbursement of payments to
participants is the responsibility of DTC, and disbursement of payments to the
beneficial owners is the responsibility of participants.
Except as provided in this prospectus supplement, a beneficial owner
will not be entitled to receive physical delivery of the Debentures.
Accordingly, each beneficial owner must rely on the procedures of DTC to
exercise any rights under the Debentures.
DTC may discontinue providing its services as securities depositary
with respect to the Debentures at any time by giving reasonable notice to FPL
Group Capital. In the event no successor securities depositary is obtained,
certificates for the Debentures will be printed and delivered. FPL Group Capital
may decide to replace DTC or any successor depositary. Additionally, FPL Group
Capital may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary) with respect to the Debentures. In that
event, certificates for the Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that FPL Group Capital and FPL Group
believe to be reliable, but FPL Group Capital and FPL Group do not take
responsibility for the accuracy of this information.
UNDERWRITING
FPL Group Capital is selling the Debentures to the underwriters named
in the table below pursuant to an underwriting agreement dated the date of this
prospectus supplement. J.P. Morgan Securities Inc. ("JPMorgan") and Morgan
Stanley & Co. Incorporated have been named as joint book-running managers of the
offering. FPL Group Capital has agreed to sell to each of the underwriters, and
each of the underwriters has severally agreed to purchase, the principal amount
of Debentures set forth opposite that underwriter's name in the table below:
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
J.P. Morgan Securities Inc............................. $175,000,000
Morgan Stanley & Co. Incorporated...................... 175,000,000
Lehman Brothers Inc.................................... 50,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................... 50,000,000
Scotia Capital (USA) Inc............................... 50,000,000
------------
Total...................................... $500,000,000
============
Under the terms and conditions of the underwriting agreement, the
underwriters must buy all of the Debentures if they buy any of them. The
underwriting agreement provides that the obligations of the underwriters
pursuant thereto are subject to certain conditions. In the event of a default by
an underwriter, the underwriting agreement provides that, in certain
S-6
circumstances, the purchase commitment of the non-defaulting underwriters may be
increased or the underwriting agreement may be terminated. The underwriters will
sell the Debentures to the public when and if the underwriters buy the
Debentures from FPL Group Capital.
FPL Group Capital has been advised by the underwriters that the
underwriters initially propose to offer the Debentures to the public at the
public offering price on the cover page of this prospectus supplement, and to
dealers at that price less a concession not in excess of .200% of the
principal amount of the Debentures. The underwriters may allow, and the dealers
may reallow, a discount not in excess of .150% of the principal amount of
the Debentures to other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.
There is no established trading market for the Debentures. The
underwriters have advised FPL Group Capital that they intend to make a trading
market in the Debentures but are not obligated to do so and may discontinue such
market-making activities at any time without notice. FPL Group Capital cannot
give any assurance as to the maintenance of the trading market for, or the
liquidity of, the Debentures.
In connection with the offering, the underwriters are permitted to
engage in transactions that stabilize the market price of the Debentures. Such
transactions consist of bids or purchases to peg, fix or maintain the price of
the Debentures. If the underwriters create a short position in the Debentures in
connection with the offering, i.e., if the underwriters sell more Debentures
than are on the cover page of this prospectus supplement, the underwriters may
reduce that short position by purchasing Debentures in the open market.
Purchases of a security to stabilize the price or to reduce a short position
could cause the price of the security to be higher than it might be in the
absence of such purchases.
JPMorgan will make the Debentures available for distribution on the
Internet through a proprietary Web site and/or a third-party system operated by
Market Axess Inc., an Internet-based communications technology provider. Market
Axess Inc. is providing the system as a conduit for communications between
JPMorgan and its customers and is not a party to any transactions. Market Axess
Inc., a registered broker-dealer, will receive compensation from JPMorgan based
on transactions JPMorgan conducts through the system. JPMorgan will make the
Debentures available to its customers through the Internet distributions,
whether made through a proprietary or third-party system, on the same terms as
distributions made through other channels.
FPL Group Capital estimates that its expenses in connection with the
sale of the Debentures, other than underwriting discounts, will be $400,000.
This estimate includes expenses relating to printing, rating agency fees,
trustees' fees and legal fees, among other expenses.
FPL Group Capital has agreed to indemnify the underwriters against, or
to contribute to payments the underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act of 1933.
Certain of the underwriters or their affiliates may engage from time to
time in various general financing and banking transactions with FPL Group
Capital and its affiliates.
LEGAL OPINIONS
Steel Hector & Davis LLP, Miami, Florida and Thelen Reid & Priest LLP,
New York, New York, co-counsel to FPL Group and FPL Group Capital, will pass
upon the legality of the Debentures for FPL Group and FPL Group Capital. Hunton
& Williams LLP, New York, New York, will pass upon the legality of the
Debentures for the underwriters. Thelen Reid & Priest LLP and Hunton & Williams
LLP may rely as to all matters of Florida law upon the opinion of Steel Hector &
Davis LLP, and Steel Hector & Davis LLP may rely as to all matters of New York
law upon the opinion of Thelen Reid & Priest LLP.
S-7
PROSPECTUS
FPL GROUP CAPITAL INC
DEBT SECURITIES AND JUNIOR SUBORDINATED DEBENTURES
GUARANTEED AS DESCRIBED IN THIS PROSPECTUS BY
FPL GROUP, INC.
--------------------------
FPL GROUP, INC.
COMMON STOCK WITH ATTACHED PREFERRED SHARE PURCHASE RIGHTS
STOCK PURCHASE CONTRACTS
AND
STOCK PURCHASE UNITS
--------------------------
FPL GROUP CAPITAL TRUST I
FPL GROUP CAPITAL TRUST II
PREFERRED TRUST SECURITIES
GUARANTEED AS DESCRIBED IN THIS PROSPECTUS BY
FPL GROUP, INC.
--------------------------
Each of FPL Group, Inc., FPL Group Capital Inc, FPL Group Capital Trust
I and FPL Group Capital Trust II may offer from time to time up to
$1,337,450,000 of securities provided that the aggregate amount of securities
offered by all such issuers may not exceed $1,337,450,000. In addition, FPL
Group Capital may offer from time to time up to $662,550,000 of additional debt
securities guaranteed by FPL Group.
FPL Group, FPL Group Capital, FPL Group Capital Trust I and FPL Group
Capital Trust II will provide specific terms of the securities, including the
offering prices, in supplements to this prospectus. The supplements may also
add, update or change information contained in this prospectus. You should read
this prospectus and any supplements carefully before you invest.
FPL Group's common stock is listed on the New York Stock Exchange and
trades under the symbol "FPL."
FPL Group, FPL Group Capital, FPL Group Capital Trust I and FPL Group
Capital Trust II may offer these securities directly or through underwriters,
agents or dealers. The supplements to this prospectus will describe the terms of
any particular plan of distribution, including any underwriting arrangements.
The "Plan of Distribution" section beginning on page 50 of this prospectus also
provides more information on this topic.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS TO READ ABOUT
CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE MAKING AN INVESTMENT IN THESE
SECURITIES.
FPL Group's, FPL Group Capital's, FPL Group Capital Trust I's and FPL
Group Capital Trust II's principal executive offices are located at 700 Universe
Boulevard, Juno Beach, Florida 33408, telephone number (561) 694-4000, and their
mailing address is P.O. Box 14000, Juno Beach, Florida 33408-0420.
---------------------------------------------------
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.
April 3, 2003
ABOUT THIS PROSPECTUS
This prospectus is a combined prospectus which relates to two different
registration statements filed at different times with the Securities and
Exchange Commission ("SEC"), each using a "shelf" registration process. The
registration statements to which this combined prospectus relates are the
following:
(1) Registration Statement Nos. 333-85218 and 333-85218-01, declared
effective by the SEC on April 24, 2002, pursuant to which FPL
Group Capital may offer from time to time, in one or more
offerings, up to a total of $662,550,000 of debt securities
guaranteed by FPL Group; and
(2) Registration Statement Nos. 333-102173, 333-102173-01,
333-102173-02 and 333-102173-03, declared effective by the SEC on
April 3, 2003, pursuant to which
(a) FPL Group may offer from time to time, in one or more
offerings, up to a total of $1,337,450,000 of common stock
with attached preferred share purchase rights, stock
purchase contracts, stock purchase units, guarantees of FPL
Group Capital's debt securities and junior subordinated
debentures and/or guarantees of the preferred trust
securities of FPL Group Capital Trust I and FPL Group
Capital Trust II,
(b) FPL Group Capital may offer from time to time, in one or
more offerings, up to a total of $1,337,450,000 of debt
securities and junior subordinated debentures, and
(c) FPL Group Capital Trust I and FPL Group Capital Trust II may
offer from time to time, in one or more offerings, up to a
total of $1,337,450,000 of preferred trust securities;
provided that the aggregate amount of all such securities or
combinations of such securities offered by FPL Group, FPL Group
Capital, FPL Group Capital Trust I and FPL Group Capital Trust II
under that registration statement may not exceed $1,337,450,000.
FPL Group Capital Trust I and FPL Group Capital Trust II are each
referred to in this prospectus as the "Trust."
This prospectus provides you with a general description of the
securities that FPL Group, FPL Group Capital and/or the Trust may offer. Each
time FPL Group, FPL Group Capital and/or the Trust sells securities, FPL Group,
FPL Group Capital and/or the Trust will provide a prospectus supplement that
will contain specific information about the terms of that offering. The
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 additional information described under the headings
"Where You Can Find More Information" and "Incorporation by Reference."
For more detailed information about the securities, you can read the
exhibits to the registration statement. Those exhibits have been either filed
with the registration statement or incorporated by reference to earlier SEC
filings listed in the registration statement.
2
RISK FACTORS
Before purchasing the securities, investors should carefully consider
the following risk factors together with the other information incorporated by
reference or provided in this prospectus or in a prospectus supplement in order
to evaluate an investment in the securities.
FPL GROUP AND FPL GROUP CAPITAL ARE SUBJECT TO COMPLEX LAWS AND REGULATIONS AND
TO CHANGES IN LAWS AND REGULATIONS, INCLUDING INITIATIVES REGARDING
RESTRUCTURING OF THE ENERGY INDUSTRY. THESE FACTORS MAY HAVE A NEGATIVE IMPACT
ON THE BUSINESS AND RESULTS OF OPERATIONS OF FPL GROUP AND FPL GROUP CAPITAL.
FPL Group and FPL Group Capital are subject to changes in laws or
regulations, including the Public Utility Regulatory Policies Act of 1978 and
the Public Utility Holding Company Act of 1935, changing governmental policies
and regulatory actions, including those of the Federal Energy Regulatory
Commission, the Florida Public Service Commission and the utility commissions of
other states in which FPL Group or FPL Group Capital have operations, and the
U.S. Nuclear Regulatory Commission, with respect to, among other things, allowed
rates of return, industry and rate structure, operation of nuclear power
facilities, operation and construction of plant facilities, operation and
construction of transmission facilities, acquisition, disposal, depreciation and
amortization of assets and facilities, recovery of fuel and purchased power
costs, decommissioning costs, return on common equity and equity ratio limits,
and present or prospective wholesale and retail competition (including but not
limited to retail wheeling and transmission costs). The Florida Public Service
Commission has the authority to disallow recovery of costs that it considers
excessive or imprudently incurred.
The regulatory process generally restricts Florida Power & Light
Company's ability to grow earnings and does not provide any assurance as to
achievement of earnings levels.
FPL Group and FPL Group Capital are subject to extensive federal, state
and local environmental statutes, rules and regulations relating to air quality,
water quality, waste management, natural resources and health and safety that
could, among other things, restrict or limit the use of certain fuels required
for the production of electricity. There are significant capital, operating and
other costs associated with compliance with these environmental statutes, rules
and regulations, and those costs could be even more significant in the future.
FPL Group and FPL Group Capital operate in a changing market
environment influenced by various legislative and regulatory initiatives
regarding deregulation, regulation or restructuring of the energy industry,
including deregulation of the production and sale of electricity. FPL Group and
its subsidiaries will need to adapt to these changes and may face increasing
competitive pressure.
THE OPERATION OF POWER GENERATION FACILITIES, INCLUDING NUCLEAR FACILITIES,
INVOLVES SIGNIFICANT RISKS THAT COULD ADVERSELY AFFECT THE RESULTS OF OPERATIONS
AND FINANCIAL CONDITION OF FPL GROUP AND FPL GROUP CAPITAL.
The operation of power generation facilities involves many risks,
including start up risks, breakdown or failure of equipment, transmission lines
or pipelines, the dependence on a specific fuel source or the impact of unusual
or adverse weather conditions (including natural disasters such as hurricanes),
as well as the risk of performance below expected levels of output or
efficiency. This could result in lost revenues and/or increased expenses.
Insurance, warranties or performance guarantees may not cover any or all of the
lost revenues or increased expenses, including the cost of replacement power. In
addition to these risks, FPL Group's nuclear units face certain risks that are
unique to the nuclear industry including additional regulatory actions up to and
including shut down of the units stemming from public safety concerns, whether
at FPL Group's plants or at the plants of other nuclear operators. Breakdown or
failure of an operating facility of FPL Energy, LLC, a subsidiary of FPL Group
Capital, may prevent the facility from performing under applicable power sales
agreements which, in certain situations, could result in termination of the
agreement or incurring a liability for liquidated damages.
3
THE CONSTRUCTION OF, AND CAPITAL IMPROVEMENTS TO, POWER GENERATION FACILITIES
INVOLVE SUBSTANTIAL RISKS. SHOULD CONSTRUCTION OR CAPITAL IMPROVEMENT EFFORTS BE
UNSUCCESSFUL, THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF FPL GROUP AND
FPL GROUP CAPITAL COULD BE NEGATIVELY AFFECTED.
FPL Group's and FPL Group Capital's ability to successfully and timely
complete their power generation facilities currently under construction, those
projects yet to begin construction or capital improvements to existing
facilities is contingent upon many variables and subject to substantial risks.
Should any such efforts be unsuccessful, FPL Group and FPL Group Capital could
be subject to additional costs, termination payments under committed contracts
and/or the write off of their investment in the project or improvement.
THE USE OF DERIVATIVE CONTRACTS BY FPL GROUP AND FPL GROUP CAPITAL IN THE NORMAL
COURSE OF BUSINESS COULD RESULT IN FINANCIAL LOSSES THAT NEGATIVELY IMPACT THE
RESULTS OF OPERATIONS OF FPL GROUP AND FPL GROUP CAPITAL.
FPL Group and FPL Group Capital use derivative instruments, such as
swaps, options, futures and forwards to manage their commodity and financial
market risks, and to a lesser extent, engage in limited trading activities. FPL
Group and FPL Group Capital could recognize financial losses as a result of
volatility in the market values of these contracts, or if a counterparty fails
to perform. In addition, Florida Power & Light Company's use of such instruments
could be subject to prudency challenges by the Florida Public Service Commission
and if found imprudent, cost disallowance.
FPL GROUP'S UNREGULATED BUSINESSES, PARTICULARLY FPL ENERGY, ARE SUBJECT TO
RISKS, MANY OF WHICH ARE BEYOND THE CONTROL OF FPL GROUP AND FPL GROUP CAPITAL,
THAT MAY REDUCE THE REVENUES AND ADVERSELY IMPACT THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF FPL GROUP AND FPL GROUP CAPITAL.
There are other risks associated with FPL Group's and FPL Group
Capital's nonregulated businesses, particularly FPL Energy. In addition to risks
discussed elsewhere, risk factors specifically affecting FPL Energy's success in
competitive wholesale markets include the ability to efficiently develop and
operate generating assets, the price and supply of fuel, transmission
constraints, competition from new sources of generation, excess generation
capacity and demand for power. There can be significant volatility in market
prices for fuel and electricity, and there are other financial, counterparty and
market risks that are beyond the control of FPL Energy. FPL Energy's inability
or failure to effectively hedge its assets or positions against changes in
commodity prices, interest rates, counterparty credit risk or other risk
measures could significantly impair its future financial results. In keeping
with industry trends, a portion of FPL Energy's power generation facilities
operate wholly or partially without long-term power purchase agreements. As a
result, power from these facilities is sold on the spot market or on a
short-term contractual basis, which may affect the volatility of FPL Group's and
FPL Group Capital's financial results. In addition, FPL Energy's business
depends upon transmission facilities owned and operated by others; if
transmission is disrupted or capacity is inadequate or unavailable FPL Energy's
ability to sell and deliver its wholesale power may be limited.
FPL GROUP'S AND FPL GROUP CAPITAL'S ABILITY TO SUCCESSFULLY IDENTIFY AND
COMPLETE ACQUISITIONS IS SUBJECT TO SIGNIFICANT RISKS, INCLUDING THE EFFECT OF
INCREASED COMPETITION RESULTING FROM THE CONSOLIDATION OF THE POWER INDUSTRY.
FPL Group and FPL Group Capital are likely to encounter significant
competition for acquisition opportunities that may become available as a result
of the consolidation of the power industry. In addition, FPL Group and FPL Group
Capital may be unable to identify attractive acquisition opportunities at
favorable prices and to successfully and timely complete and integrate them.
BECAUSE FPL GROUP AND FPL GROUP CAPITAL RELY ON ACCESS TO CAPITAL MARKETS, THE
INABILITY TO ACCESS CAPITAL MARKETS ON FAVORABLE TERMS MAY LIMIT THE ABILITY OF
FPL GROUP AND FPL GROUP CAPITAL TO GROW THEIR BUSINESSES AND WOULD LIKELY
INCREASE INTEREST COSTS.
FPL Group and FPL Group Capital rely on access to capital markets as a
significant source of liquidity for capital requirements not satisfied by
operating cash flows. The inability of FPL Group and FPL Group Capital to
4
maintain their current credit ratings could affect their ability to raise
capital on favorable terms, particularly during times of uncertainty in the
capital markets which, in turn could impact FPL Group's and FPL Group Capital's
ability to grow their businesses and would likely increase their interest costs.
WEATHER CONDITIONS CAN AFFECT FPL GROUP'S AND FPL GROUP CAPITAL'S RESULTS OF
OPERATIONS.
FPL Group's and FPL Group Capital's results of operations can be
affected by changes in the weather. Weather conditions directly influence the
demand for electricity and natural gas and affect the price of energy
commodities, and can affect the production of electricity at wind and
hydro-powered facilities. In addition, severe weather can be destructive,
causing outages and/or property damage, which could require additional costs to
be incurred.
FPL GROUP AND FPL GROUP CAPITAL ARE SUBJECT TO COSTS AND OTHER EFFECTS OF LEGAL
PROCEEDINGS, CHANGES IN TAX AND INFLATION RATES, AND CHANGES IN OR ADDITIONS TO
APPLICABLE TAX POLICIES, RATES OF INFLATION AND ACCOUNTING STANDARDS.
FPL Group and FPL Group Capital are subject to costs and other effects
of legal and administrative proceedings, settlements, investigations and claims;
as well as the effect of new, or changes in, tax rates or policies, rates of
inflation or accounting standards.
THREATS OF TERRORISM AND CATASTROPHIC EVENTS THAT COULD RESULT FROM TERRORISM
MAY IMPACT THE OPERATIONS OF FPL GROUP AND FPL GROUP CAPITAL IN UNPREDICTABLE
WAYS.
FPL Group and FPL Group Capital are subject to direct and indirect
effects of terrorist threats and activities. Generation and transmission
facilities, in general, have been identified as potential targets. The effects
of terrorist threats and activities include, among other things, terrorist
actions or responses to such actions or threats, the inability to generate,
purchase or transmit power, the risk of a significant slowdown in growth or a
decline in the U.S. economy, delay in economic recovery in the U.S., and the
increased cost and adequacy of security and insurance.
THE ABILITY OF FPL GROUP AND FPL GROUP CAPITAL TO OBTAIN INSURANCE AND THE TERMS
OF ANY AVAILABLE INSURANCE COVERAGE COULD BE AFFECTED BY NATIONAL AND
COMPANY-SPECIFIC EVENTS.
FPL Group's and FPL Group Capital's ability to obtain insurance, and
the cost of and coverage provided by such insurance, could be affected by
national events as well as company-specific events.
FPL GROUP AND FPL GROUP CAPITAL ARE SUBJECT TO EMPLOYEE WORKFORCE FACTORS THAT
COULD AFFECT THE BUSINESSES AND FINANCIAL CONDITION OF FPL GROUP AND FPL GROUP
CAPITAL.
FPL Group and FPL Group Capital are subject to employee workforce
factors, including loss or retirement of key executives, availability of
qualified personnel, collective bargaining agreements with union employees or
work stoppage that could affect the business and financial condition of FPL
Group and FPL Group Capital.
FPL GROUP CAPITAL
FPL Group Capital was incorporated in 1985 as a Florida corporation and
is a wholly-owned subsidiary of FPL Group. FPL Group Capital holds the capital
stock of, and provides funding for, FPL Group's operating subsidiaries other
than Florida Power & Light Company. These operating subsidiaries' business
activities primarily consist of independent power projects.
5
FPL GROUP
FPL Group is a holding company incorporated in 1984 as a Florida
corporation. FPL Group's principal subsidiary, Florida Power & Light Company, is
engaged in the generation, transmission, distribution and sale of electric
energy. Other operations are conducted through FPL Group Capital. FPL Group is a
public utility holding company, as defined in the Public Utility Holding Company
Act of 1935. FPL Group is exempt from substantially all of the provisions of the
Public Utility Holding Company Act of 1935 on the basis that the businesses of
FPL Group and Florida Power & Light Company, FPL Group's principal subsidiary,
are predominantly intrastate in character.
FPL GROUP CAPITAL TRUST I AND FPL GROUP CAPITAL TRUST II
FPL Group Capital Trust I and FPL Group Capital Trust II are identical
Delaware statutory trusts created pursuant to separate trust agreements among
FPL Group as depositor of the Trust, The Bank of New York as the Property
Trustee, The Bank of New York (Delaware) as the Delaware Trustee and one or more
Administrative Trustees appointed by FPL Group. The trust agreements will be
amended and restated substantially in the form filed as an exhibit to the
registration statement. Each trust agreement, as so amended and restated, is
referred to in this prospectus as the "Trust Agreement." The Trust exists only
to issue its preferred trust securities and common trust securities and to hold
the junior subordinated debentures of FPL Group Capital as trust assets. All of
the common trust securities will be owned by FPL Group. The common trust
securities will represent at least 3% of the total capital of the Trust.
Payments on any distribution payment date or redemption date will be made on the
common trust securities pro rata with the preferred trust securities, except
that the common trust securities' right to payment will be subordinated to the
rights of the preferred trust securities if there is a default under the trust
agreement. The Trust has a term of approximately 40 years, but may dissolve
earlier as provided in the Trust Agreement.
The Trust's business and affairs will be conducted by its
Administrative Trustees. The office of the Delaware Trustee in the State of
Delaware is White Clay Center, Route 273, Newark, Delaware 19711. The principal
place of business of the Trust is 700 Universe Boulevard, Juno Beach, Florida
33408, and the telephone number is (561) 694-4000.
USE OF PROCEEDS
Unless otherwise stated in a prospectus supplement, FPL Group Capital
and FPL Group will each add the net proceeds from the sale of these securities
to its respective general funds. FPL Group uses its general funds for corporate
purposes, including to provide funds for its subsidiaries. FPL Group Capital
uses its general funds for corporate purposes, including to repay short-term
borrowings and to redeem or repurchase outstanding long-term debt obligations.
FPL Group Capital and FPL Group will each temporarily invest any proceeds that
it does not need to use immediately in short-term instruments.
The Trust will use the proceeds from the sale of preferred trust
securities and common trust securities to invest in junior subordinated
debentures issued by FPL Group Capital. FPL Group Capital will add the net
proceeds from the sale of such junior subordinated debentures to its general
funds, which will be used as described above.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table shows FPL Group's consolidated ratio of earnings to
fixed charges for each of its last five fiscal years:
Years Ended December 31,
-------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
3.08 3.77 4.30 5.26 3.88
6
WHERE YOU CAN FIND MORE INFORMATION
FPL Group files annual, quarterly and other reports and other
information with the SEC. You can read and copy any information filed by FPL
Group with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can obtain additional information about the Public
Reference Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains an Internet site (http://www.sec.gov)
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, including FPL Group.
FPL Group also maintains an Internet site (http://www.fplgroup.com).
FPL Group Capital does not file reports or other information with the
SEC. FPL Group includes summarized financial information relating to FPL Group
Capital in some of its reports filed with the SEC. FPL Group does not intend to
include any separate financial information with respect to FPL Group Capital in
its consolidated financial statements because FPL Group and FPL Group Capital
have determined that this information is not material to the holders of FPL
Group Capital's debt securities.
No separate financial statements of the Trust are included in this
prospectus. FPL Group and the Trust do not consider those financial statements
to be material to holders of the preferred trust securities because (1) the
Trust is a newly formed special purpose entity and has no operating history or
independent operations, and (2) the Trust is not engaged in and does not propose
to engage in any activity other than holding as trust assets the junior
subordinated debentures of FPL Group Capital and issuing its preferred trust
securities and common trust securities. FPL Group and the Trust do not expect
the Trust to file periodic reports under Sections 13 or 15(d) of the Securities
Exchange Act of 1934.
INCORPORATION BY REFERENCE
The SEC allows FPL Group Capital, FPL Group and the Trust to
"incorporate by reference" the information that FPL Group files with the SEC,
which means that FPL Group Capital, FPL Group and the Trust may, in this
prospectus, disclose important information to you by referring you to those
documents. The information incorporated by reference is an important part of
this prospectus. Information that FPL Group files in the future with the SEC
will automatically update and supersede this information. FPL Group Capital, FPL
Group and the Trust are incorporating by reference the document listed below and
any future filings FPL Group makes with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus until FPL Group, FPL Group Capital and/or the Trust sell all of these
securities:
(1) FPL Group's Annual Report on Form 10-K for the year ended December 31, 2002.
You may request a copy of these documents, at no cost to you, by
writing or calling Robert J. Reger, Jr., Esq., Thelen Reid & Priest LLP, 875
Third Avenue, New York, New York, 10022, (212) 603-2000. FPL Group will provide
to each person, including any beneficial owner, to whom this prospectus is
delivered, a copy of any or all of the information that has been incorporated by
reference in this prospectus but not delivered with this prospectus.
CAUTIONARY STATEMENTS
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, FPL Group, FPL Group Capital and the Trust are
hereby filing cautionary statements identifying important factors that could
cause FPL Group's and FPL Group Capital's actual results to differ materially
from those projected in forward-looking statements (as such term is defined in
the Private Securities Litigation Reform Act of 1995) made by or on behalf of
FPL Group, FPL Group Capital and the Trust in this prospectus or any supplement
to this prospectus, in presentations, in response to questions or otherwise. Any
statements that express, or involve discussions as to expectations, beliefs,
plans, objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as "will likely result," "are
expected to," "will continue," "is anticipated," "estimated," "projection,"
"target," "outlook") are not statements of historical facts and may be
forward-looking. Forward-looking statements involve estimates, assumptions and
uncertainties. Accordingly, any such statements are qualified in their entirety
7
by reference to, and are accompanied by, the specific factors discussed in "Risk
Factors" herein and in the reports that are incorporated herein by reference (in
addition to any assumptions and other factors referred to specifically in
connection with such forward-looking statements) that could cause FPL Group's or
FPL Group Capital's actual results to differ materially from those contained in
forward-looking statements made by or on behalf of FPL Group, FPL Group Capital
or the Trust.
Any forward-looking statement speaks only as of the date on which that
statement is made, and neither FPL Group, FPL Group Capital nor the Trust
undertakes any obligation to update any forward-looking statement to reflect
events or circumstances after the date on which that statement is made or to
reflect the occurrence of unanticipated events. New factors emerge from time to
time and it is not possible for management to predict all of those factors, nor
can it assess the impact of each of those factors on the business or the extent
to which any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking statement.
The issues and associated risks and uncertainties discussed in "Risk
Factors" herein and in the reports that are incorporated by reference herein are
not the only ones FPL Group or FPL Group Capital may face. Additional issues may
arise or become material as the energy industry evolves. The risks and
uncertainties associated with those additional issues could impair FPL Group's
and FPL Group Capital's businesses in the future.
DESCRIPTION OF OFFERED DEBT SECURITIES
GENERAL. FPL Group Capital will issue its debt securities (other than
the Junior Subordinated Debentures (as defined herein)), in one or more series,
under an Indenture, dated as of June 1, 1999, between FPL Group Capital and The
Bank of New York, as trustee. This Indenture, as it may be amended and
supplemented from time to time, is referred to in this prospectus as the
"Indenture." The Bank of New York, as trustee under the Indenture, is referred
to in this prospectus as the "Indenture Trustee."
These debt securities are referred to in this prospectus as the "Offered Debt
Securities."
The Indenture provides for the issuance from time to time of
debentures, notes or other debt by FPL Group Capital in an unlimited amount. The
Offered Debt Securities and all other debentures, notes or other debt of FPL
Group Capital issued under the Indenture are collectively referred to in this
prospectus as the "Debt Securities."
This section briefly summarizes some of the terms of the Offered Debt
Securities and some of the provisions of the Indenture. This summary does not
contain a complete description of the Offered Debt Securities. You should read
this summary together with the Indenture and the officer's certificates or other
documents establishing the Offered Debt Securities for a complete understanding
of all the provisions and for the definitions of some terms used in this
summary. The Indenture, the form of officer's certificate that may be used to
establish a series of Offered Debt Securities and a form of Offered Debt
Securities have been previously filed with the SEC, and are exhibits to the
registration statement filed with the SEC of which this prospectus is a part. In
addition, the Indenture is qualified under the Trust Indenture Act of 1939 and
is therefore subject to the provisions of the Trust Indenture Act of 1939. You
should read the Trust Indenture Act of 1939 for a complete understanding of its
provisions.
Each series of Offered Debt Securities may have different terms. FPL
Group Capital will include some or all of the following information about a
specific series of Offered Debt Securities in the prospectus supplement(s)
relating to those Offered Debt Securities:
(1) the title of those Offered Debt Securities,
(2) any limit upon the aggregate principal amount of those Offered Debt
Securities,
(3) the date(s) on which FPL Group Capital will pay the principal of those
Offered Debt Securities,
8
(4) the rate(s) of interest on those Offered Debt Securities, or how the
rate(s) of interest will be determined, the date(s) from which
interest will accrue, the dates on which FPL Group Capital will pay
interest and the record date for any interest payable on any interest
payment date,
(5) the person to whom FPL Group Capital will pay interest on those
Offered Debt Securities on any interest payment date, if other than
the person in whose name those Offered Debt Securities are registered
at the close of business on the record date for that interest payment,
(6) the place(s) at which or methods by which FPL Group Capital will make
payments on those Offered Debt Securities and the place(s) at which or
methods by which the registered owners of those Offered Debt
Securities may transfer or exchange those Offered Debt Securities and
serve notices and demands to or upon FPL Group Capital,
(7) the security registrar and any paying agent or agents for those
Offered Debt Securities,
(8) any date(s) on which, the price(s) at which and the terms and
conditions upon which FPL Group Capital may, at its option, redeem
those Offered Debt Securities, in whole or in part, and any
restrictions on those redemptions,
(9) any sinking fund or other provisions or options held by the registered
owners of those Offered Debt Securities that would obligate FPL Group
Capital to repurchase or redeem those Offered Debt Securities,
(10) the denominations in which FPL Group Capital may issue those Offered
Debt Securities, if other than denominations of $1,000 and any
integral multiple of $1,000,
(11) the currency or currencies in which FPL Group Capital may pay the
principal of or premium, if any, or interest on those Offered Debt
Securities (if other than in U.S. dollars),
(12) if FPL Group Capital or a registered owner may elect to pay, or
receive, principal of or premium, if any, or interest on those Offered
Debt Securities in a currency other than that in which those Offered
Debt Securities are stated to be payable, the terms and conditions
upon which that election may be made,
(13) if FPL Group Capital will, or may, pay the principal of or premium, if
any, or interest on those Offered Debt Securities in securities or
other property, the type and amount of those securities or other
property and the terms and conditions upon which FPL Group Capital or
a registered owner may elect to pay or receive those payments,
(14) if the amount payable in respect of principal of or premium, if any,
or interest on those Offered Debt Securities may be determined by
reference to an index or other fact or event ascertainable outside of
the Indenture, the manner in which those amounts will be determined,
(15) the portion of the principal amount of those Offered Debt Securities
that FPL Group Capital will pay upon declaration of acceleration of
the maturity of those Offered Debt Securities, if other than the
entire principal amount of those Offered Debt Securities,
(16) any events of default with respect to those Offered Debt Securities
and any covenants of FPL Group Capital for the benefit of the
registered owners of those Offered Debt Securities, other than those
specified in the Indenture,
(17) the terms, if any, pursuant to which those Offered Debt Securities may
be exchanged for shares of capital stock or other securities of any
other entity,
9
(18) a definition of "Eligible Obligations" under the Indenture with
respect to those Offered Debt Securities denominated in a currency
other than U.S. dollars, and any other provisions for the
reinstatement of FPL Group Capital's indebtedness in respect of those
Offered Debt Securities after their satisfaction and discharge,
(19) if FPL Group Capital will issue those Offered Debt Securities in
global form, necessary information relating to the issuance of those
Offered Debt Securities in global form,
(20) if FPL Group Capital will issue those Offered Debt Securities as
bearer securities, necessary information relating to the issuance of
those Offered Debt Securities as bearer securities,
(21) any limits on the rights of the registered owners of those Offered
Debt Securities to transfer or exchange those Offered Debt Securities
or to register their transfer, and any related service charges,
(22) any exceptions to the provisions governing payments due on legal
holidays or any variations in the definition of business day with
respect to those Offered Debt Securities,
(23) other than the Guarantee described under "Description of the Debt
Securities Guarantee" below, any collateral security, assurance, or
guarantee for those Offered Debt Securities, and
(24) any other terms of those Offered Debt Securities that are not
inconsistent with the provisions of the Indenture. (Indenture, Section
301).
FPL Group Capital may sell Offered Debt Securities at a discount below
their principal amount. Some of the important United States federal income tax
considerations applicable to Offered Debt Securities sold at a discount below
their principal amount may be discussed in the related prospectus supplement. In
addition, some of the important United States federal income tax or other
considerations applicable to any Offered Debt Securities that are denominated in
a currency other than U.S. dollars may be discussed in the related prospectus
supplement.
Except as otherwise stated in the related prospectus supplement, the
covenants in the Indenture would not give registered owners of Offered Debt
Securities protection in the event of a highly-leveraged transaction involving
FPL Group Capital or FPL Group.
SECURITY AND RANKING. The Offered Debt Securities will be unsecured
obligations of FPL Group Capital. The Indenture does not limit FPL Group
Capital's ability to provide security with respect to other Debt Securities. All
Debt Securities issued under the Indenture will rank equally and ratably with
all other Debt Securities issued under the Indenture, except to the extent that
FPL Group Capital elects to provide security with respect to any Debt Security
without providing that security to all outstanding Debt Securities as allowed
under the Indenture. The Offered Debt Securities will rank senior to the Junior
Subordinated Debentures. The Indenture does not limit FPL Group Capital's
ability to issue other unsecured debt.
FPL Group Capital is a holding company that derives substantially all
of its income from its operating subsidiaries. Therefore, the Debt Securities
will be effectively subordinated to all indebtedness and other liabilities,
including trade payables, debt and preferred stock, incurred or issued by FPL
Group Capital's subsidiaries. The Indenture does not place any limit on the
amounts of liabilities, including debt or preferred stock, that FPL Group
Capital's subsidiaries may issue, guarantee or otherwise incur.
PAYMENT AND PAYING AGENTS. Except as stated in the related prospectus
supplement, on each interest payment date FPL Group Capital will pay interest on
each Offered Debt Security to the person in whose name that Offered Debt
Security is registered as of the close of business on the record date relating
to that interest payment date. However, on the date that the Offered Debt
Securities mature, FPL Group Capital will pay the interest to the person to whom
it pays the principal. Also, if FPL Group Capital has defaulted in the payment
of interest on any Offered Debt Security, it may pay that defaulted interest to
the registered owner of that Offered Debt Security:
10
(1) as of the close of business on a date that the Indenture Trustee
selects, which may not be more than 15 days or less than 10 days
before the date that FPL Group Capital proposes to pay the defaulted
interest, or
(2) in any other lawful manner that does not violate the requirements of
any securities exchange on which that Offered Debt Security is listed
and that the Indenture Trustee believes is acceptable. (Indenture,
Section 307).
Unless otherwise stated in the related prospectus supplement, the
principal, premium, if any, and interest on the Offered Debt Securities at
maturity will be payable when such Offered Debt Securities are presented at the
main corporate trust office of The Bank of New York, as paying agent, in The
City of New York. FPL Group Capital may change the place of payment on the
Offered Debt Securities, appoint one or more additional paying agents, including
itself, and remove any paying agent. (Indenture, Section 602).
TRANSFER AND EXCHANGE. Unless otherwise stated in the related
prospectus supplement, Offered Debt Securities may be transferred or exchanged
at the main corporate trust office of The Bank of New York, as security
registrar, in The City of New York. FPL Group Capital may change the place for
transfer and exchange of the Offered Debt Securities and may designate one or
more additional places for that transfer and exchange.
Except as otherwise stated in the related prospectus supplement, there
will be no service charge for any transfer or exchange of the Offered Debt
Securities. However, FPL Group Capital may require payment of any tax or other
governmental charge in connection with any transfer or exchange of the Offered
Debt Securities.
FPL Group Capital will not be required to transfer or exchange any
Offered Debt Security selected for redemption. Also, FPL Group Capital will not
be required to transfer or exchange any Offered Debt Security during a period of
15 days before selection of Offered Debt Securities to be redeemed. (Indenture,
Section 305).
DEFEASANCE. FPL Group Capital may, at any time, elect to have all of
its obligations discharged with respect to all or a portion of any Debt
Securities. To do so, FPL Group Capital must irrevocably deposit with the
Indenture Trustee or any paying agent, in trust:
(1) money in an amount that will be sufficient to pay all or that portion
of the principal, premium, if any, and interest due and to become due
on those Debt Securities, on or prior to their maturity, or
(2) in the case of a deposit made prior to the maturity of that series of
Debt Securities,
(a) direct obligations of, or obligations unconditionally guaranteed
by, the United States and entitled to the benefit of its full
faith and credit that do not contain provisions permitting their
redemption or other prepayment at the option of their issuer, and
(b) certificates, depositary receipts or other instruments that
evidence a direct ownership interest in those obligations or in
any specific interest or principal payments due in respect of
those obligations that do not contain provisions permitting their
redemption or other prepayment at the option of their issuer, the
principal of and the interest on which, when due, without any
regard to reinvestment of that principal or interest, will
provide money that, together with any money deposited with or
held by the Indenture Trustee, will be sufficient to pay all or
that portion of the principal, premium, if any, and interest due
and to become due on those Debt Securities, on or prior to their
maturity, or
(3) a combination of (1) and (2) that will be sufficient to pay all or
that portion of the principal, premium, if any, and interest due and
to become due on those Debt Securities, on or prior to their maturity.
(Indenture, Section 701).
LIMITATION ON LIENS. So long as any Debt Securities remain outstanding,
FPL Group Capital will not secure any indebtedness with a lien on any shares of
the capital stock of any of its majority-owned subsidiaries, which shares of
11
capital stock FPL Group Capital now or hereafter directly owns, unless FPL Group
Capital equally secures all Debt Securities. However, this restriction does not
apply to or prevent:
(1) any lien on capital stock created at the time FPL Group Capital
acquires that capital stock, or within 270 days after that time, to
secure all or a portion of the purchase price for that capital stock,
(2) any lien on capital stock existing at the time FPL Group Capital
acquires that capital stock (whether or not FPL Group Capital assumes
the obligations secured by the lien and whether or not the lien was
created in contemplation of the acquisition),
(3) any extensions, renewals or replacements of the liens described in (1)
and (2) above, or of any indebtedness secured by those liens;
provided, that,
(a) the principal amount of indebtedness secured by those liens
immediately after the extension, renewal or replacement may not
exceed the principal amount of indebtedness secured by those
liens immediately before the extension, renewal or replacement,
and
(b) the extension, renewal or replacement lien is limited to no more
than the same proportion of all shares of capital stock as were
covered by the lien that was extended, renewed or replaced, or
(4) any lien arising in connection with court proceedings; provided, that,
either
(a) the execution or enforcement of that lien is effectively stayed
within 30 days after entry of the corresponding judgment (or the
corresponding judgment has been discharged within that 30 day
period) and the claims secured by that lien are being contested
in good faith by appropriate proceedings,
(b) the payment of that lien is covered in full by insurance and the
insurance company has not denied or contested coverage, or
(c) so long as that lien is adequately bonded, any appropriate legal
proceedings that have been duly initiated for the review of the
corresponding judgement, decree or order have not been fully
terminated or the periods within which those proceedings may be
initiated have not expired.
Liens on any shares of the capital stock of any of FPL Group Capital's
majority-owned subsidiaries, which shares of capital stock FPL Group Capital now
or hereafter directly owns, other than liens described in (1) through (4) above,
are referred to in this prospectus as "Restricted Liens." The foregoing
limitation does not apply to the extent that FPL Group Capital creates any
Restricted Liens to secure indebtedness that, together with all other
indebtedness of FPL Group Capital secured by Restricted Liens, does not at the
time exceed 5% of FPL Group Capital's Consolidated Capitalization. (Indenture,
Section 608).
For this purpose, "Consolidated Capitalization" means the sum of:
(1) Consolidated Shareholders' Equity;
(2) Consolidated Indebtedness for borrowed money (exclusive of any amounts
which are due and payable within one year); and, without duplication
(3) any preference or preferred stock of FPL Group Capital or any
Consolidated Subsidiary which is subject to mandatory redemption or
sinking fund provisions.
The term "Consolidated Shareholders' Equity" as used above means the
total assets of FPL Group Capital and its Consolidated Subsidiaries less all
liabilities of FPL Group Capital and its Consolidated Subsidiaries. As used in
this definition, the term "liabilities" means all obligations which would, in
accordance with generally accepted accounting principles, be classified on a
balance sheet as liabilities, including without limitation:
12
(1) indebtedness secured by property of FPL Group Capital or any of its
Consolidated Subsidiaries whether or not FPL Group Capital or such
Consolidated Subsidiary is liable for the payment thereof unless, in
the case that FPL Group Capital or such Consolidated Subsidiary is not
so liable, such property has not been included among the assets of FPL
Group Capital or such Consolidated Subsidiary on such balance sheet,
(2) deferred liabilities, and
(3) indebtedness of FPL Group Capital or any of its Consolidated
Subsidiaries that is expressly subordinated in right and priority of
payment to other liabilities of FPL Group Capital or such Consolidated
Subsidiary.
As used in this definition, "liabilities" includes preference or preferred stock
of FPL Group Capital or any Consolidated Subsidiary only to the extent of any
such preference or preferred stock that is subject to mandatory redemption or
sinking fund provisions.
The term "Consolidated Indebtedness" means total indebtedness as shown
on the consolidated balance sheet of FPL Group Capital and its Consolidated
Subsidiaries.
The term "Consolidated Subsidiary," means at any date any direct or
indirect majority-owned subsidiary whose financial statements would be
consolidated with those of FPL Group Capital in FPL Group Capital's consolidated
financial statements as of such date in accordance with generally accepted
accounting principles. (Indenture, Section 608).
The foregoing limitation does not limit in any manner the ability of:
(1) FPL Group Capital to place liens on any of its assets other than the
capital stock of directly held, majority-owned subsidiaries,
(2) FPL Group Capital or FPL Group to cause the transfer of its assets or
those of its subsidiaries, including the capital stock covered by the
foregoing restrictions,
(3) FPL Group to place liens on any of its assets, or
(4) any of the direct or indirect subsidiaries of FPL Group Capital or FPL
Group (other than FPL Group Capital) to place liens on any of their
assets.
CONSOLIDATION, MERGER, AND SALE OF ASSETS. Under the Indenture, FPL
Group Capital may not consolidate with or merge into any other entity or convey,
transfer or lease its properties and assets substantially as an entirety to any
entity, unless:
(1) the entity formed by that consolidation, or the entity into which FPL
Group Capital is merged, or the entity that acquires or leases FPL
Group Capital's property and assets, is an entity organized and
existing under the laws of the United States, any state or the
District of Columbia and that entity expressly assumes FPL Group
Capital's obligations on all Debt Securities and under the Indenture,
(2) immediately after giving effect to the transaction, no event of
default under the Indenture and no event that, after notice or lapse
of time or both, would become an event of default under the Indenture
exists, and
(3) FPL Group Capital delivers an officer's certificate and an opinion of
counsel to the Indenture Trustee, as provided in the Indenture.
(Indenture, Section 1101).
The Indenture does not restrict FPL Group Capital in a merger in which
FPL Group Capital is the surviving entity.
13
EVENTS OF DEFAULT. Each of the following is an event of default under
the Indenture with respect to the Debt Securities of any series:
(1) failure to pay interest on the Debt Securities of that series within
30 days after it is due,
(2) failure to pay principal or premium, if any, on the Debt Securities of
that series when it is due,
(3) failure to comply with any other covenant in the Indenture, other than
a covenant that does not relate to that series of Debt Securities,
that continues for 90 days after FPL Group Capital receives written
notice of such failure to comply from the Indenture Trustee, or FPL
Group Capital and the Indenture Trustee receive written notice of such
failure to comply from the registered owners of at least 33% in
principal amount of the Debt Securities of that series,
(4) certain events of bankruptcy, insolvency or reorganization of FPL
Group Capital, and
(5) any other event of default specified with respect to the Debt
Securities of that series. (Indenture, Section 801).
In the case of the third event of default listed above, the Indenture
Trustee may extend the grace period. In addition, if registered owners of a
particular series have given a notice of default, then registered owners of at
least the same percentage of Debt Securities of that series, together with the
Indenture Trustee, may also extend the grace period. The grace period will be
automatically extended if FPL Group Capital has initiated and is diligently
pursuing corrective action. (Indenture, Section 801). An event of default with
respect to the Debt Securities of a particular series will not necessarily
constitute an event of default with respect to Debt Securities of any other
series issued under the Indenture.
REMEDIES. If an event of default applicable to the Debt Securities of
one or more series, but not applicable to all outstanding Debt Securities,
exists, then either the Indenture Trustee or the registered owners of at least
33% in aggregate principal amount of the Debt Securities of each of the affected
series may declare the principal of and accrued but unpaid interest on all the
Debt Securities of that series to be due and payable immediately. However, under
the Indenture, some Debt Securities may provide for a specified amount less than
their entire principal amount to be due and payable upon that declaration. These
Debt Securities are defined as "Discount Securities" in the Indenture.
If the event of default is applicable to all outstanding Debt
Securities, then only the Indenture Trustee or the registered owners of at least
33% in aggregate principal amount of all outstanding Debt Securities of all
series, voting as one class, and not the registered owners of any one series,
may make a declaration of acceleration. However, the event of default giving
rise to the declaration relating to any series of Debt Securities will be
automatically waived, and that declaration and its consequences will be
automatically rescinded and annulled, if, at any time after that declaration and
before a judgment or decree for payment of the money due has been obtained:
(1) FPL Group Capital deposits with the Indenture Trustee a sum sufficient
to pay:
(a) all overdue interest on all Debt Securities of that series,
(b) the principal of and any premium on any Debt Securities of that
series that have become due for reasons other than that
declaration, and interest that is then due,
(c) interest on overdue interest for that series, and
(d) all amounts due to the Indenture Trustee under the Indenture, and
(2) any other event of default with respect to the Debt Securities of that
series has been cured or waived as provided in the Indenture.
(Indenture, Section 802).
14
Other than its obligations and duties in case of an event of default
under the Indenture, the Indenture Trustee is not obligated to exercise any of
its rights or powers under the Indenture at the request or direction of any of
the registered owners, unless those registered owners offer reasonable indemnity
to the Indenture Trustee. (Indenture, Section 903). If they provide this
reasonable indemnity, the registered owners of a majority in principal amount of
any series of Debt Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred on the Indenture Trustee,
with respect to the Debt Securities of that series. However, if an event of
default under the Indenture relates to more than one series of Debt Securities,
only the registered owners of a majority in aggregate principal amount of all
affected series of Debt Securities, considered as one class, will have the right
to make that direction. Also, the direction must not violate any law or the
Indenture, and may not expose the Indenture Trustee to personal liability in
circumstances where its indemnity would not, in the Indenture Trustee's sole
discretion, be adequate. (Indenture, Section 812).
No registered owner of Debt Securities of any series will have any
right to institute any proceeding under the Indenture, or any remedy under the
Indenture, unless:
(1) that registered owner has previously given to the Indenture Trustee
written notice of a continuing event of default with respect to the
Debt Securities of that series,
(2) the registered owners of a majority in aggregate principal amount of
the outstanding Debt Securities of all series in respect of which an
event of default under the Indenture exists, considered as one class,
have made written request to the Indenture Trustee, and have offered
reasonable indemnity to the Indenture Trustee to institute that
proceeding in its own name as trustee, and
(3) the Indenture Trustee has failed to institute any proceeding, and has
not received from the registered owners of a majority in aggregate
principal amount of the outstanding Debt Securities of all series in
respect of which an event of default under the Indenture exists,
considered as one class, a direction inconsistent with that request,
within 60 days after that notice, request and offer. (Indenture,
Section 807).
However, these limitations do not apply to a suit instituted by a registered
owner of a Debt Security for the enforcement of payment of the principal of or
premium, if any, or interest on that Debt Security on or after the applicable
due date specified in that Debt Security. (Indenture, Section 808).
FPL Group Capital is required to deliver to the Indenture Trustee an
annual statement as to its compliance with all conditions and covenants under
the Indenture. (Indenture, Section 606).
MODIFICATION AND WAIVER. Without the consent of any registered owner of
Debt Securities, FPL Group Capital and the Indenture Trustee may amend or
supplement the Indenture for any of the following purposes:
(1) to provide for the assumption by any permitted successor to FPL Group
Capital of FPL Group Capital's obligations under the Indenture and the
Debt Securities in the case of a merger or consolidation or a
conveyance, transfer or lease of its assets substantially as an
entirety,
(2) to add covenants of FPL Group Capital or to surrender any right or
power conferred upon FPL Group Capital by the Indenture,
(3) to add any additional events of default,
(4) to change, eliminate or add any provision of the Indenture, provided
that if that change, elimination or addition will materially adversely
affect the interests of the registered owners of Debt Securities of
any series or tranche, that change, elimination or addition will
become effective with respect to that series or tranche only
15
(a) when the required consent of the registered owners of Debt
Securities of that series or tranche has been obtained, or
(b) when no Debt Securities of that series or tranche remain
outstanding under the Indenture,
(5) to provide collateral security for all but not a part of the Debt
Securities,
(6) to establish the form or terms of Debt Securities of any other series
or tranche,
(7) to provide for the authentication and delivery of bearer securities
and the related coupons and for other matters relating to those bearer
securities,
(8) to accept the appointment of a successor Indenture Trustee with
respect to the Debt Securities of one or more series and to change any
of the provisions of the Indenture as necessary to provide for the
administration of the trusts under the Indenture by more than one
trustee,
(9) to add procedures to permit the use of a non-certificated system of
registration for the Debt Securities of all or any series or tranche,
(10) to change any place where
(a) the principal of and premium, if any, and interest on all or any
series or tranche of Debt Securities are payable,
(b) all or any series or tranche of Debt Securities may be
transferred or exchanged, and
(c) notices and demands to or upon FPL Group Capital in respect of
Debt Securities and the Indenture may be served, or
(11) to cure any ambiguity or inconsistency or to add or change any other
provisions with respect to matters and questions arising under the
Indenture, provided those changes or additions may not materially
adversely affect the interests of the registered owners of Debt
Securities of any series or tranche. (Indenture, Section 1201).
The registered owners of a majority in aggregate principal amount of
the Debt Securities of all series then outstanding may waive compliance by FPL
Group Capital with certain restrictive provisions of the Indenture. (Indenture,
Section 607). The registered owners of a majority in principal amount of the
outstanding Debt Securities of any series may waive any past default under the
Indenture with respect to that series, except a default in the payment of
principal, premium, if any, or interest and a default with respect to certain
restrictive covenants or provisions of the Indenture that cannot be modified or
amended without the consent of the registered owner of each outstanding Debt
Security of that series affected. (Indenture, Section 813).
In addition to any amendments described above, if the Trust Indenture
Act of 1939 is amended after the date of the Indenture in a way that requires
changes to the Indenture or in a way that permits changes to, or the elimination
of, provisions that were previously required by the Trust Indenture Act of 1939,
the Indenture will be deemed to be amended to conform to that amendment of the
Trust Indenture Act of 1939 or to make those changes, additions or eliminations.
FPL Group Capital and the Indenture Trustee may, without the consent of any
registered owners, enter into supplemental indentures to make that amendment.
(Indenture, Section 1201).
Except for any amendments described above, the consent of the
registered owners of a majority in aggregate principal amount of the Debt
Securities of all series then outstanding, considered as one class, is required
for all other modifications to the Indenture. However, if less than all of the
series of Debt Securities outstanding are directly affected by a proposed
supplemental indenture, then the consent only of the registered owners of a
majority in aggregate principal amount of outstanding Debt Securities of all
directly affected series, considered as one class, is required. But, if FPL
Group Capital issues any series of Debt Securities in more than one tranche and
16
if the proposed supplemental indenture directly affects the rights of the
registered owners of Debt Securities of less than all of those tranches, then
the consent only of the registered owners of a majority in aggregate principal
amount of the outstanding Debt Securities of all directly affected tranches,
considered as one class, will be required. However, none of those amendments or
modifications may:
(1) change the dates on which the principal of or interest on a Debt
Security is due without the consent of the registered owner of that
Debt Security,
(2) reduce any Debt Security's principal amount or rate of interest (or
the amount of any installment of that interest) or change the method
of calculating that rate without the consent of the registered owner
of that Debt Security,
(3) reduce any premium payable upon the redemption of a Debt Security
without the consent of the registered owner of that Debt Security,
(4) change the currency (or other property) in which a Debt Security is
payable without the consent of the registered owner of that Debt
Security,
(5) impair the right to sue to enforce payments on any Debt Security on or
after the date that it states that the payment is due (or, in the case
of redemption, on or after the redemption date) without the consent of
the registered owner of that Debt Security,
(6) reduce the percentage in principal amount of the outstanding Debt
Security of any series or tranche whose owners must consent to an
amendment, supplement or waiver without the consent of the registered
owner of each outstanding Debt Security of that series or tranche,
(7) reduce the requirements for quorum or voting of any series or tranche
without the consent of the registered owner of each outstanding Debt
Security of that series or tranche, or
(8) modify certain of the provisions of the Indenture relating to
supplemental indentures, waivers of certain covenants and waivers of
past defaults with respect to the Debt Securities of any series or
tranche, without the consent of the registered owner of each
outstanding Debt Security affected by the modification.
A supplemental indenture that changes or eliminates any provision of
the Indenture that has expressly been included only for the benefit of one or
more particular series or tranches of Debt Securities, or that modifies the
rights of the registered owners of Debt Securities of that series or tranche
with respect to that provision, will not affect the rights under the Indenture
of the registered owners of the Debt Securities of any other series or tranche.
(Indenture, Section 1202).
The Indenture provides that, in order to determine whether the
registered owners of the required principal amount of the outstanding Debt
Securities have given any request, demand, authorization, direction, notice,
consent or waiver under the Indenture, or whether a quorum is present at the
meeting of the registered owners of Debt Securities, Debt Securities owned by
FPL Group Capital or any other obligor upon the Debt Securities or any affiliate
of FPL Group Capital or of that other obligor (unless FPL Group Capital, that
affiliate or that obligor owns all Debt Securities outstanding under the
Indenture, determined without regard to this provision) will be disregarded and
deemed not to be outstanding. (Indenture, Section 101).
If FPL Group Capital solicits any action under the Indenture from
registered owners of Debt Securities, FPL Group Capital may, at its option, by
signing a written request to the Indenture Trustee, fix in advance a record date
for determining the registered owners of Debt Securities entitled to take that
action. However, FPL Group Capital will not be obligated to do this. If FPL
Group Capital fixes such a record date, that action may be taken before or after
that record date, but only the registered owners of record at the close of
business on that record date will be deemed to be registered owners of Debt
Securities for the purposes of determining whether registered owners of the
required proportion of the outstanding Debt Securities have authorized that
action. For these purposes, the outstanding Debt Securities will be computed as
17
of the record date. Any action of a registered owner of any Debt Security under
the Indenture will bind every future registered owner of that Debt Security, or
any Debt Security replacing that Debt Security, with respect to anything that
the Indenture Trustee or FPL Group Capital do, fail to do, or allow to be done
in reliance on that action, whether or not that action is noted upon that Debt
Security. (Indenture, Section 104).
RESIGNATION OF INDENTURE TRUSTEE. The Indenture Trustee may resign at
any time with respect to any series of Debt Securities by giving written notice
of its resignation to FPL Group Capital. Also, the registered owners of a
majority in principal amount of the outstanding Debt Securities of one or more
series of Debt Securities may remove the Indenture Trustee at any time with
respect to the Debt Securities of that series, by delivering an instrument
evidencing this action to the Indenture Trustee and FPL Group Capital. The
resignation or removal of the Indenture Trustee and the appointment of a
successor trustee will not become effective until a successor trustee accepts
its appointment.
Except with respect to an Indenture Trustee appointed by the registered
owners of Debt Securities, the Indenture Trustee will be deemed to have resigned
and the successor will be deemed to have been appointed as trustee in accordance
with the Indenture if:
(1) no event of default under the Indenture or event that, after notice or
lapse of time, or both, would become an event of default under the
Indenture exists, and
(2) FPL Group Capital has delivered to the Indenture Trustee a resolution
of its Board of Directors appointing a successor trustee and that
successor trustee has accepted that appointment in accordance with the
terms of the Indenture. (Indenture, Section 910).
NOTICES. Notices to registered owners of Debt Securities will be sent
by mail to the addresses of those registered owners as they appear in the
security register for those Debt Securities. (Indenture, Section 106).
TITLE. FPL Group Capital, the Indenture Trustee, and any agent of FPL
Group Capital or the Indenture Trustee, may treat the person in whose name a
Debt Security is registered as the absolute owner of that Debt Security, whether
or not that Debt Security is overdue, for the purpose of making payments and for
all other purposes, regardless of any notice to the contrary. (Indenture,
Section 308).
GOVERNING LAW. The Indenture and the Debt Securities will be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to New York's conflict of law principles, except to the extent that the
law of any other jurisdiction is mandatorily applicable. (Indenture, Section
112).
DESCRIPTION OF THE DEBT SECURITIES GUARANTEE
GENERAL. This section briefly summarizes some of the provisions of the
Guarantee Agreement, dated as of June 1, 1999, between FPL Group and The Bank of
New York, as Guarantee Trustee. The Guarantee Agreement was executed for the
benefit of the Indenture Trustee, which holds the Guarantee Agreement for the
benefit of registered owners of the Debt Securities covered by the Guarantee
Agreement. This summary does not contain a complete description of the Guarantee
Agreement. You should read this summary together with the Guarantee Agreement
for a complete understanding of all the provisions. The Guarantee Agreement has
been previously filed with the SEC and is an exhibit to the registration
statement filed with the SEC of which this prospectus is a part. In addition,
the Guarantee Agreement is qualified as an indenture under the Trust Indenture
Act of 1939 and is therefore subject to the provisions of the Trust Indenture
Act of 1939. You should read the Trust Indenture Act of 1939 for a complete
understanding of its provisions.
Under the Guarantee Agreement, FPL Group absolutely, irrevocably and
unconditionally guarantees the prompt and full payment, when due and payable
(including upon acceleration or redemption), of the principal, interest and
premium, if any, on the Debt Securities that are covered by the Guarantee
Agreement to the registered owners of those Debt Securities, according to the
terms of those Debt Securities and the Indenture. Pursuant to the Guarantee
Agreement, all of the Debt Securities are covered by the Guarantee Agreement
except Debt Securities that by their terms are expressly not entitled to the
18
benefit of the Guarantee Agreement. All of the Offered Debt Securities will be
covered by the Guarantee Agreement. This guarantee is referred to in this
prospectus as the "Guarantee." FPL Group is only required to make these payments
if FPL Group Capital fails to pay or provide for punctual payment of any of
those amounts on or before the expiration of any applicable grace periods.
(Guarantee Agreement, Section 5.01). In the Guarantee Agreement, FPL Group has
waived its right to require the Guarantee Trustee, the Indenture Trustee or the
registered owners of Debt Securities covered by the Guarantee Agreement to
exhaust their remedies against FPL Group Capital prior to bringing suit against
FPL Group. (Guarantee Agreement, Section 5.06).
The Guarantee is a guarantee of payment when due (i.e., the guaranteed
party may institute a legal proceeding directly against FPL Group to enforce its
rights under the Guarantee Agreement without first instituting a legal
proceeding against any other person or entity). The Guarantee is not a guarantee
of collection. (Guarantee Agreement, Section 5.01).
Except as otherwise stated in the related prospectus supplement, the
covenants in the Guarantee Agreement would not give registered owners of the
Debt Securities covered by the Guarantee Agreement protection in the event of a
highly-leveraged transaction involving FPL Group.
SECURITY AND RANKING. The Guarantee is an unsecured obligation of FPL
Group and will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of FPL Group. The Guarantee will rank senior to the
Preferred Trust Securities Guarantee and the Subordinated Guarantee (each as
defined below). There is no limit on the amount of other indebtedness, including
guarantees, that FPL Group may incur or issue.
FPL Group is a holding company that derives substantially all of its
income from its operating subsidiaries. Therefore, the Guarantee is effectively
subordinated to all indebtedness and other liabilities, including trade
payables, debt and preferred stock incurred or issued by FPL Group's
subsidiaries. Neither the Indenture nor the Guarantee Agreement places any limit
on the amount of liabilities, including debt or preferred stock, that FPL
Group's subsidiaries may issue, guarantee or otherwise incur.
EVENTS OF DEFAULT. An event of default under the Guarantee Agreement
will occur upon the failure of FPL Group to perform any of its payment
obligations under the Guarantee Agreement. (Guarantee Agreement, Section 1.01).
The registered owners of a majority of the aggregate principal amount of the
outstanding Debt Securities covered by the Guarantee Agreement have the right
to:
(1) direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee under the Guarantee
Agreement, or
(2) direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee Agreement. (Guarantee Agreement, Section
3.01).
The Guarantee Trustee must give notice of any event of default under
the Guarantee Agreement known to the Guarantee Trustee to the registered owners
of Debt Securities covered by the Guarantee Agreement within 90 days after the
occurrence of that event of default, in the manner and to the extent provided in
subsection (c) of Section 313 of the Trust Indenture Act of 1939, unless such
event of default has been cured or waived prior to the giving of such notice.
(Guarantee Agreement, Section 2.07). The registered owners of all outstanding
Debt Securities may waive any past event of default and its consequences.
(Guarantee Agreement, Section 2.06).
The Guarantee Trustee, the Indenture Trustee and the registered owners
of Debt Securities covered by the Guarantee Agreement have all of the rights and
remedies available under applicable law and may sue to enforce the terms of the
Guarantee Agreement and to recover damages for the breach of the Guarantee
Agreement. The remedies of each of the Guarantee Trustee, the Indenture Trustee
and the registered owners of Debt Securities covered by the Guarantee Agreement,
to the extent permitted by law, are cumulative and in addition to any other
remedy now or hereafter existing at law or in equity. At the option of any of
the Guarantee Trustee, the Indenture Trustee or the registered owners of Debt
Securities covered by the Guarantee Agreement, that person or entity may join
FPL Group in any lawsuit commenced by that person or entity against FPL Group
Capital with respect to any obligations under the Guarantee Agreement. Also,
19
that person or entity may recover against FPL Group in that lawsuit, or in any
independent lawsuit against FPL Group, without first asserting, prosecuting or
exhausting any remedy or claim against FPL Group Capital. (Guarantee Agreement,
Section 5.06).
FPL Group is required to deliver to the Guarantee Trustee an annual
statement as to its compliance with all conditions under the Guarantee
Agreement. (Guarantee Agreement, Section 2.04).
MODIFICATION. FPL Group and the Guarantee Trustee may, without the
consent of any registered owner of Debt Securities covered by the Guarantee
Agreement, agree to any changes to the Guarantee Agreement that do not
materially adversely affect the rights of registered owners. The Guarantee
Agreement also may be amended with the prior approval of the registered owners
of a majority in aggregate principal amount of all outstanding Debt Securities
covered by the Guarantee Agreement. However, the right of any registered owner
of Debt Securities covered by the Guarantee Agreement to receive payment under
the Guarantee Agreement on the due date of the Debt Securities held by that
registered owner, or to institute suit for the enforcement of that payment on or
after that due date, may not be impaired or affected without the consent of that
registered owner. (Guarantee Agreement, Section 6.01).
TERMINATION OF THE GUARANTEE AGREEMENT. The Guarantee Agreement will
terminate and be of no further force and effect upon full payment of all Debt
Securities covered by the Guarantee Agreement. (Guarantee Agreement, Section
5.05).
GOVERNING LAW. The Guarantee Agreement will be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflict of laws principles thereunder, except to the extent that the law of
any other jurisdiction is mandatorily applicable. (Guarantee Agreement, Section
5.07).
DESCRIPTION OF COMMON STOCK
GENERAL. The following statements describing FPL Group's common stock
are not intended to be a complete description. For additional information,
please see FPL Group's Restated Articles of Incorporation ("Charter") and its
bylaws, which set forth the terms of the common stock. Please also see the
Restated Articles of Incorporation of Florida Power & Light Company, and the
Mortgage and Deed of Trust, dated as of January 1, 1944, between Florida Power &
Light Company and Deutsche Bank Trust Company Americas, as trustee, as amended
and supplemented (the "Mortgage"), which contain restrictions which may limit
the ability of Florida Power & Light Company to pay dividends to FPL Group. Each
of these documents has been previously filed with the SEC and are exhibits to
the registration statement filed with the SEC of which this prospectus is a
part. Reference is also made to the laws of the State of Florida.
FPL Group's authorized capital stock consists of 300,000,000 shares of
common stock, $.01 par value, and 100,000,000 shares of serial preferred stock,
$.01 par value. As of March 13, 2003, 183,124,562 shares of common stock were
issued and outstanding and no shares of serial preferred stock were issued and
outstanding. See "Description of Common Stock--Preferred Share Purchase Rights"
below. The FPL Group common stock has no preemptive, subscription or conversion
rights, and there are no redemption or sinking fund provisions applicable
thereto. The outstanding shares of common stock are, and when issued the shares
offered hereby will be, fully paid and nonassessable.
All outstanding FPL Group common stock is listed on the NYSE and trades
under the symbol "FPL." The registrar and transfer agent for the FPL Group
common stock is EquiServe Trust Company, N.A.
A number of provisions that are in FPL Group's Charter and bylaws will
make it difficult for another company to acquire FPL Group and for a holder of
FPL Group common stock to receive any related takeover premium for its shares.
See "--Voting Rights and Non-Cumulative Voting" and "--Preferred Share Purchase
Rights" below.
DIVIDEND RIGHTS. Each share of common stock is entitled to participate
equally with respect to dividends declared on the common stock out of funds
legally available for the payment thereof.
20
The Charter of FPL Group does not limit the dividends that can be paid
on the common stock. However, as a practical matter, the ability of FPL Group to
pay dividends on the common stock is dependent upon dividends paid to it by its
subsidiaries, primarily Florida Power & Light Company. Florida Power & Light
Company's ability to pay dividends is limited by restrictions contained in
Florida Power & Light Company's Restated Articles of Incorporation and in the
Mortgage. However, these restrictions do not currently limit Florida Power &
Light Company's ability to pay dividends to FPL Group from its retained
earnings.
VOTING RIGHTS AND NON-CUMULATIVE VOTING. In general, the holders of FPL
Group common stock are entitled to one vote per share for the election of
directors and for other corporate purposes. The Charter:
(1) permits the shareholders to remove a director only for cause and only
by the affirmative vote of 75% in voting power of the outstanding
shares of common stock and other outstanding voting stock, voting as a
class;
(2) provides that a vacancy on the Board of Directors may be filled only
by the remaining directors;
(3) permits shareholders to take action only at an annual meeting, or a
special meeting duly called by certain officers, the Board of
Directors or the holders of a majority in voting power of the
outstanding shares of voting stock entitled to vote on the matter;
(4) requires the affirmative vote of 75% in voting power of the
outstanding shares of voting stock to approve certain Business
Combinations (as defined below) with an Interested Shareholder (as
defined below) or its affiliate, unless approved by a majority of the
Continuing Directors (as defined below) or, in certain cases, unless
certain minimum price and procedural requirements are met; and
(5) requires the affirmative vote of 75% in voting power of the
outstanding shares of voting stock to amend the bylaws or to amend
certain provisions of the Charter including those provisions discussed
in (1) through (4) above.
Such provisions may have significant effects on the ability of the shareholders
to change the composition of an incumbent Board of Directors or to benefit from
certain transactions which are opposed by an incumbent Board of Directors.
The term "Interested Shareholder" is defined in the Charter to include
a security holder who owns 10% or more in voting power of the outstanding shares
of voting stock, and the term "Continuing Director" is defined in the Charter to
include any director who is not an affiliate of an Interested Shareholder. The
above provisions dealing with Business Combinations involving FPL Group and an
Interested Shareholder may discriminate against a security holder who becomes an
Interested Shareholder by reason of the beneficial ownership of such amount of
common or other voting stock. The term "Business Combination" is defined in the
Charter to include:
(1) any merger or consolidation of FPL Group or any direct or indirect
majority-owned subsidiary with (a) an Interested Shareholder or (b)
any other corporation which is, or after such merger or consolidation
would be, an affiliate of an Interested Shareholder;
(2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition in one transaction or a series of transactions to or with
any Interested Shareholder or any affiliate of an Interested
Shareholder of assets of FPL Group or any direct or indirect
majority-owned subsidiary having an aggregate fair market value of
$10,000,000 or more;
(3) the issuance or transfer by FPL Group or any direct or indirect
majority-owned subsidiary in one transaction or a series of
transactions of any securities of FPL Group or any subsidiary to any
Interested Shareholder or any affiliate of any Interested Shareholder
in exchange for cash, securities or other property, or a combination
thereof, having an aggregate fair market value of $10,000,000 or more;
21
(4) the adoption of any plan or proposal for the liquidation or
dissolution of FPL Group proposed by or on behalf of an Interested
Shareholder or an affiliate of an Interested Shareholder; or
(5) any reclassification of securities, including any reverse stock split,
or recapitalization, of FPL Group, or any merger or consolidation of
FPL Group with any of its direct or indirect majority-owned
subsidiaries or any other transaction which has the direct or indirect
effect of increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of FPL Group or any
direct or indirect wholly-owned subsidiary which is directly or
indirectly owned by any Interested Shareholder or any affiliate of any
Interested Shareholder.
The holders of common stock do not have cumulative voting rights, and
therefore the holders of more than 50% of a quorum (majority) of the outstanding
shares of common stock can elect all of FPL Group's directors. Unless otherwise
provided in the Charter or the bylaws or in accordance with applicable law, the
affirmative vote of a majority of the total number of shares represented at a
meeting and entitled to vote is required for shareholder action on a matter.
Voting rights for the election of directors or otherwise, if any, for any series
of the serial preferred stock, will be established by the Board of Directors
when such series is issued.
LIQUIDATION RIGHTS. After satisfaction of creditors and payments due
the holders of serial preferred stock, if any, the holders of common stock are
entitled to share ratably in the distribution of all remaining assets.
PREFERRED SHARE PURCHASE RIGHTS. The following statements describing
FPL Group's preferred share purchase rights (each, a "Right") are not intended
to be a complete description. For additional information, please see the form of
Rights Agreement, dated as of July 1, 1996, between FPL Group and EquiServe
Trust Company, N.A., as successor Rights Agent, as amended, which sets forth the
terms of the Rights. The Rights Agreement and amendments thereto have been
previously filed with the SEC and are exhibits to the registration statement
filed with SEC of which this prospectus is a part.
On June 17, 1996, FPL Group's Board of Directors declared a dividend of
one Right for each outstanding share of common stock. Thereafter, until the
Distribution Date (as defined below), FPL Group will issue one Right with each
newly issued share of common stock. Each Right (prior to the expiration or
redemption of the Rights) will entitle the holder thereof to purchase from FPL
Group one-hundredth of a share of FPL Group's Series A Junior Participating
Preferred Stock, $.0l par value (Junior Preferred Shares), at an exercise price
of $120 per Right (Purchase Price), subject to adjustment. Until the
Distribution Date, the Rights are represented by the shares of common stock, and
are not exercisable or transferable apart from the common stock. The
Distribution Date is the earlier to occur of:
(1) the tenth day after the public announcement that a person or group has
acquired beneficial ownership of 10% or more of the common stock, or
(2) the tenth business day after a person commences, or announces an
intention to commence, a tender or exchange offer, the consummation of
which would result in the beneficial ownership by a person or group of
10% or more of the common stock. At any time before a person or group
becomes a 10% holder, the Board of Directors may extend the 10-day
period.
Separate certificates evidencing the Rights will be mailed to holders of the
common stock as of the close of business on the Distribution Date. The Rights
are exercisable at any time after the Distribution Date, unless earlier
redeemed, or exchanged, and could then begin trading separately from the common
stock. The Rights do not have any voting rights and are not entitled to
dividends.
If a person or group becomes a 10% holder, each Right not owned by the
10% holder would become exercisable for the number of shares of common stock
which, at that time, would have a market value of two times the exercise price
of the Right. In the event that FPL Group is acquired in a merger or other
business combination transaction, or 50% or more of FPL Group's assets or
earning power are sold or otherwise transferred, after a person or group has
become a 10% holder, each Right will entitle its holder to purchase, at the
exercise price of the Right, that number of shares of common stock of the
22
acquiring company which at the time of such transaction would have a market
value of two times the exercise price of the Right.
The Rights are redeemable by FPL Group's Board of Directors in whole,
but not in part, at $.01 per Right at any time prior to the time that a person
or group acquires beneficial ownership of 10% or more of the outstanding common
stock. The Rights will expire on June 30, 2006 (unless the expiration date is
extended or the Rights are earlier redeemed or exchanged as described below).
The Purchase Price, and the number of Junior Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution
(1) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Junior Preferred Shares,
(2) as a result of the grant to holders of Junior Preferred Shares of
certain rights or warrants to subscribe for or purchase Junior
Preferred Shares at a price, or securities convertible into Junior
Preferred Shares with a conversion price, at less than the current
market price of Junior Preferred Shares, or
(3) as a result of the distribution to holders of Junior Preferred Shares
of evidences of indebtedness or assets (excluding regular periodic
cash dividends or dividends payable in Junior Preferred Shares) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in the
Purchase Price. The number of Rights and the number of Junior Preferred Shares
purchasable upon exercise of each Right are also subject to adjustment in the
event of a stock split, subdivision, consolidation, combination or common stock
dividend on the common stock prior to the Distribution Date.
The Board of Directors of FPL Group may exchange the Rights at an
exchange ratio of one share of common stock per Right at any time that is
(1) after the acquisition by a person or group of affiliated or associated
persons of beneficial ownership of 10% or more of the outstanding
common stock; and
(2) before the acquisition by a person or group of 50% or more of the
outstanding common stock.
The Rights have anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire FPL Group
without conditioning the offer on the redemption of the Rights or on the
acquisition of a certain number of Rights. The Rights beneficially owned by that
person or group may become null and void. The Rights should not interfere with
any merger or other business combination approved by the Board of Directors of
FPL Group, since the Rights may be redeemed by FPL Group at $.01 per Right prior
to the time that a person or group has acquired beneficial ownership of 10% or
more of the common stock.
The Junior Preferred Shares purchasable upon exercise of the Rights
will be entitled to cumulative quarterly dividends in preference to the common
stock at a rate per share equal to the greater of $10 and 100 times the dividend
declared on the common stock for such quarter. In the event of any merger,
consolidation or other transaction in which the shares of common stock are
exchanged, each Junior Preferred Share will be entitled to receive 100 times the
amount and type of consideration received per share of common stock. In the
event of a liquidation of FPL Group, the holders of Junior Preferred Shares will
be entitled to receive in preference to the common stock the greater of $100 per
share and 100 times the payment made per share of common stock. FPL Group has
the right to issue other serial preferred stock ranking prior to the Junior
Preferred Shares with respect to dividend and liquidation preferences. The
Junior Preferred Shares will be redeemable after June 30, 2006, at FPL Group's
option, in whole or in part, at a redemption price per share equal to the
greater of
(1) the per share Purchase Price, and
23
(2) the then current market price of a Junior Preferred Share.
Each Junior Preferred Share will have 100 votes on all matters submitted to a
vote of the shareholders of FPL Group, voting together with the common stock.
The rights of the Junior Preferred Shares as to dividends, liquidation,
redemption and voting, and in the event of mergers and consolidations, are
protected by customary anti-dilution provisions. Because of the nature of the
dividend, liquidation, redemption and voting rights of the Junior Preferred
Shares, the value of the interest in a Junior Preferred Share purchasable upon
the exercise of each Right should approximate the value of one share of common
stock.
The Board of Directors of FPL Group may amend the Rights Agreement and
the Rights, without the consent of the holders of the Rights. However, any
amendment adopted after a person or group becomes a 10% holder may not adversely
affect the interests of holders of Rights. The 10% holder level discussed above
is subject to certain exceptions.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
FPL Group may issue stock purchase contracts, including contracts that
obligate holders to purchase from FPL Group, and FPL Group to sell to these
holders, a specified number of shares of common stock at a future date or dates.
The consideration per share of common stock may be fixed at the time the stock
purchase contracts are issued or may be determined by reference to a specific
formula set forth in the stock purchase contracts. The stock purchase contracts
may be issued separately or as a part of stock purchase units consisting of a
stock purchase contract and either debt securities of FPL Group Capital
(including, but not limited to, Debt Securities and Junior Subordinated
Debentures), preferred trust securities of one or more FPL Group subsidiary
trusts or other subsidiary entities (including, but not limited to, Preferred
Trust Securities (as defined herein)), or debt securities of third parties
including, but not limited to, U.S. Treasury securities, that would secure the
holders' obligations to purchase the common stock under the stock purchase
contracts. The stock purchase contracts may require FPL Group to make periodic
payments to the holders of some or all of the stock purchase units or vice
versa, and such payments may be unsecured or prefunded on some basis. The stock
purchase contracts may require holders to secure their obligations under these
stock purchase contracts in a specified manner.
A prospectus supplement will describe the terms of any stock purchase
contracts or stock purchase units being offered. The description in the
prospectus supplement will not necessarily be complete, and reference will be
made to the stock purchase contracts. Some of the important United States
federal income tax considerations applicable to the stock purchase units and
stock purchase contracts will be discussed in the related prospectus supplement.
DESCRIPTION OF PREFERRED TRUST SECURITIES
GENERAL. The Trust may issue preferred trust securities and common
trust securities under the Trust Agreement. These preferred trust securities and
common trust securities are referred to in this prospectus as "Preferred Trust
Securities" and "Common Trust Securities," respectively, and collectively as
"Trust Securities." These Trust Securities will represent undivided beneficial
interests in the assets of the Trust. The junior subordinated debentures issued
by FPL Group Capital and held by the Trust are referred to in this prospectus as
the "Junior Subordinated Debentures." This section briefly summarizes some of
the provisions of the Trust Agreement. This summary does not contain a complete
description of the Trust Agreement. You should read this summary together with
the Trust Agreement for a complete understanding of all the provisions. The form
of the Trust Agreement has been previously filed with the SEC and is an exhibit
to the registration statement filed with the SEC of which this prospectus is a
part. In addition, the Trust Agreement will be qualified as an indenture under
the Trust Indenture Act of 1939 and is therefore subject to the provisions of
the Trust Indenture Act of 1939. You should read the Trust Indenture Act of 1939
for a complete understanding of its provisions.
The Preferred Trust Securities and Common Trust Securities issued by
the Trust will be substantially the same except that, if there is an event of
default under the Trust Agreement, as described below, that results from an
event of default under the Subordinated Indenture (as such term is defined below
under "Description of the Junior Subordinated Debentures and the Subordinated
24
Guarantee--General"), the right of FPL Group, as holder of the Common Trust
Securities, to payment of distributions and upon liquidation or redemption will
be subordinated to the rights of the holders of the Preferred Trust Securities.
(Trust Agreement, Section 4.03). All of the Common Trust Securities will be
owned by FPL Group. (Trust Agreement, Section 5.10).
FPL Group will fully and unconditionally guarantee payments due on the
Preferred Trust Securities through a combination of the following:
(1) FPL Group's guarantee of FPL Group Capital's payment obligations under
the Junior Subordinated Debentures (referred to in this prospectus as
the "Subordinated Guarantee");
(2) the rights of holders of Preferred Trust Securities to enforce those
obligations;
(3) FPL Group's agreement to pay the expenses of the Trust; and
(4) FPL Group's guarantee of payments due on the Preferred Trust
Securities to the extent of the Trust's legally available assets
(referred to in this prospectus as the "Preferred Trust Securities
Guarantee").
No single one of the documents listed above standing alone or operating
in conjunction with fewer than all of the other documents constitutes the
guarantee by FPL Group. It is only the combined operation of these documents
that has the effect of providing a full and unconditional, but subordinated,
guarantee as to payment by FPL Group of the Preferred Trust Securities.
The Trust will use the proceeds from the sale of the Trust Securities
to purchase Junior Subordinated Debentures from FPL Group Capital. (Trust
Agreement, Section 2.05). The Junior Subordinated Debentures will be guaranteed
by FPL Group pursuant to the Subordinated Guarantee described below and issued
under a Subordinated Indenture between FPL Group Capital and The Bank of New
York, as trustee. The Junior Subordinated Debentures will be held in trust for
the benefit of holders of the Preferred Trust Securities and Common Trust
Securities. (Trust Agreement, Section 2.09).
A prospectus supplement relating to the Preferred Trust Securities will
include specific terms of those securities and of the Junior Subordinated
Debentures. Material United States federal income tax considerations applicable
to the Preferred Trust Securities will also be discussed in the prospectus
supplement relating to the Preferred Trust Securities. For a description of some
specific terms that will affect both the Preferred Trust Securities and the
Junior Subordinated Debentures, and holders' rights under each, see "Description
of the Junior Subordinated Debentures and the Subordinated Guarantee" below.
DISTRIBUTIONS. The only income of the Trust available for distribution
to the holders of Preferred Trust Securities will be payments on the Junior
Subordinated Debentures. (Trust Agreement, Section 8.01). If neither FPL Group
Capital nor FPL Group makes interest payments on the Junior Subordinated
Debentures, the Trust will not have funds available to pay distributions on
Preferred Trust Securities. The payment of distributions, if and to the extent
the Trust has sufficient funds available for the payment of such distributions,
is guaranteed on a limited basis by FPL Group as described under "Description of
the Preferred Trust Securities Guarantee."
So long as no event of default under the Subordinated Indenture has
occurred and is continuing, FPL Group Capital may extend the interest payment
period from time to time on the Junior Subordinated Debentures for one or more
periods. (Subordinated Indenture, Section 312). As a consequence, distributions
on Preferred Trust Securities would be deferred during any such period. Interest
would, however, continue to accrue. (Trust Agreement, Section 4.01). During any
extended interest period, or for so long as an "Event of Default" under the
Subordinated Indenture resulting from a payment default or any payment default
under the Preferred Trust Securities Guarantee has occurred and is continuing,
neither FPL Group nor FPL Group Capital may:
(1) declare or pay any dividend or distribution on its capital stock;
(2) redeem, purchase, acquire or make a liquidation payment with respect
to any of its capital stock;
25
(3) pay any principal, interest or premium on, or repay, repurchase or
redeem any debt securities that are equal or junior in right of
payment with the Junior Subordinated Debentures or the Subordinated
Guarantee (as the case may be); or
(4) make any payments with respect to any guarantee of debt securities by
FPL Group if such guarantee is equal or junior in right of payment to
the Junior Subordinated Debentures or the Subordinated Guarantee (as
the case may be),
other than
(1) purchases, redemptions or other acquisitions of its capital stock in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors
or agents or a stock purchase or dividend reinvestment plan, or the
satisfaction of its obligations pursuant to any contract or security
outstanding on the date that the interest payment period is extended
requiring it to purchase, redeem or acquire its capital stock;
(2) as a result of a reclassification of its capital stock or the exchange
or conversion of all or a portion of one class or series of its
capital stock for another class or series of its capital stock;
(3) the purchase of fractional interests in shares of its capital stock
pursuant to the conversion or exchange provisions of its capital stock
or the security being converted or exchanged, or in connection with
the settlement of stock purchase contracts;
(4) dividends or distributions paid or made in its capital stock (or
rights to acquire its capital stock), or repurchases, redemptions or
acquisitions of capital stock in connection with the issuance or
exchange of capital stock (or of securities convertible into or
exchangeable for shares of its capital stock and distributions in
connection with the settlement of stock purchase contracts);
(5) redemptions, exchanges or repurchases of, or with respect to, any
rights outstanding under a shareholder rights plan or the declaration
or payment thereunder of a dividend or distribution of or with respect
to rights in the future;
(6) payments under any preferred trust securities guarantee or guarantee
of junior subordinated debentures executed and delivered by FPL Group
concurrently with the issuance by a trust of any preferred trust
securities, so long as the amount of payments made on any preferred
trust securities or junior subordinated debentures (as the case may
be) is paid on all preferred trust securities or junior subordinated
debentures (as the case may be) then outstanding on a pro rata basis
in proportion to the full distributions to which each series of
preferred trust securities or junior subordinated debentures (as the
case may be) is then entitled if paid in full;
(7) dividends or distributions by FPL Group Capital on its capital stock
owned by FPL Group, provided that FPL Group owns 100% of such capital
stock at the time of, or any record date for, such payment; or
(8) redemptions, purchases, acquisitions or liquidation payments by FPL
Group Capital with respect to its capital stock owned by FPL Group,
provided that FPL Group owns 100% of such capital stock at the time
of, or any record date for, such payment.
Before an extension period ends, FPL Group Capital may further extend
the interest payment period. No extension period as further extended may exceed
20 consecutive quarters. After any extension period and the payment of all
amounts then due, FPL Group Capital may select a new extended interest payment
period. No interest period may be extended beyond the maturity of the Junior
Subordinated Debentures.
26
REDEMPTION. Whenever Junior Subordinated Debentures are repaid, whether
at maturity or earlier redemption, the Property Trustee will apply the proceeds
to redeem a like amount of Preferred Trust Securities and Common Trust
Securities. (Trust Agreement, Section 4.02(a)).
Preferred Trust Securities will be redeemed at the redemption price
plus accrued and unpaid distributions with the proceeds from the contemporaneous
redemption or repayment of Junior Subordinated Debentures. Redemptions of the
Preferred Trust Securities will be made on a redemption date only if the Trust
has funds available for the payment of the redemption price plus accrued and
unpaid distributions. (Trust Agreement, Section 4.02(c)).
Holders of Preferred Trust Securities will be given not less than 30
nor more than 60 days' notice of any redemption. (Trust Agreement, Section
4.02(b)). On or before the redemption date, the Trust will irrevocably deposit
with the paying agent for Preferred Trust Securities sufficient funds and will
give the paying agent irrevocable instructions and authority to pay the
redemption price plus accrued and unpaid distributions to the holders upon
surrender of their Preferred Trust Securities. Distributions payable on or
before a redemption date will be payable to the holders on the record date for
the distribution payment. If notice is given and funds are deposited as
required, then on the redemption date all rights of holders of the Preferred
Trust Securities called for redemption will cease, except the right of the
holders to receive the redemption price plus accrued and unpaid distributions,
and the Preferred Trust Securities will cease to be outstanding. No interest
will accrue on amounts payable on the redemption date. In the event that any
date fixed for redemption of Preferred Trust Securities is not a business day,
then payment will be made on the next business day, except that, if such
business day falls in the next calendar year, then payment will be made on the
immediately preceding business day. No interest will be payable because of any
such delay. If payment of Preferred Trust Securities called for redemption is
improperly withheld or refused and not paid either by the Trust or by FPL Group
pursuant to the Preferred Trust Securities Guarantee, distributions on such
Preferred Trust Securities will continue to accrue to the date of payment. In
that event, the actual payment date will be considered the date fixed for
redemption for purposes of calculating the redemption price plus accrued and
unpaid distributions. (Trust Agreement, Section 4.02(d)).
Subject to applicable law, including United States federal securities
law, FPL Group or its affiliates may at any time and from time to time purchase
outstanding Preferred Trust Securities by tender, in the open market or by
private agreement.
If Preferred Trust Securities are partially redeemed on a redemption
date, a corresponding percentage of the Common Trust Securities will be
redeemed. The particular Preferred Trust Securities to be redeemed will be
selected not more than 60 days prior to the redemption date by the Property
Trustee by such method as the Property Trustee shall deem fair, taking into
account the denominations in which they were issued. The Property Trustee will
promptly notify the Preferred Trust Security registrar in writing of the
Preferred Trust Securities selected for redemption and, where applicable, the
partial amount to be redeemed. (Trust Agreement, Section 4.02(f)).
SUBORDINATION OF COMMON TRUST SECURITIES. Payment of distributions on,
and the redemption price, plus accrued and unpaid distributions, of, the
Preferred Trust Securities and Common Trust Securities shall be made pro rata
based on the liquidation preference amount of such securities. However, if on
any distribution payment date or redemption date an event of default under the
Trust Agreement resulting from an event of default under the Subordinated
Indenture has occurred and is continuing, no payment on any Common Trust
Security shall be made until all payments due on the Preferred Trust Securities
have been made. In that case, funds available to the Property Trustee shall
first be applied to the payment in full of all distributions on, or the
redemption price plus accrued and unpaid distributions of, Preferred Trust
Securities then due and payable. (Trust Agreement, Section 4.03(a)).
If an event of default under the Trust Agreement results from an event
of default under the Subordinated Indenture, the holder of Common Trust
Securities cannot take action with respect to the Trust Agreement default until
the effect of all defaults with respect to Preferred Trust Securities has been
cured, waived or otherwise eliminated. Until the event of default under the
Trust Agreement with respect to Preferred Trust Securities has been cured,
waived or otherwise eliminated, the Property Trustee shall, to the fullest
extent permitted by law, act solely on behalf of the holders of Preferred Trust
Securities and not the holder of the Common Trust Securities, and only the
27
holders of Preferred Trust Securities will have the right to direct the Property
Trustee to act on their behalf. (Trust Agreement, Section 4.03(b)).
LIQUIDATION DISTRIBUTION UPON DISSOLUTION. The Trust will be dissolved
and liquidated by the Property Trustee on the first to occur of:
(1) the expiration of the term of the Trust;
(2) the bankruptcy, dissolution or liquidation of FPL Group;
(3) the redemption of all of the Preferred Trust Securities;
(4) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction; or
(5) at any time, at the election of FPL Group. (Trust Agreement, Sections
9.01 and 9.02).
If a dissolution of the Trust occurs, the Trust will be liquidated by
the Property Trustee as expeditiously as the Property Trustee determines to be
appropriate. If a dissolution of the Trust occurs other than by redemption of
all the Preferred Trust Securities, the Property Trustee will provide for the
satisfaction of liabilities of creditors, if any, and distribute to each holder
of the Preferred Trust Securities and Common Trust Securities a proportionate
amount of Junior Subordinated Debentures. If a distribution of Junior
Subordinated Debentures is determined by the Property Trustee not to be
practical, holders of Preferred Trust Securities will be entitled to receive,
out of the assets of the Trust after adequate provision for the satisfaction of
liabilities of creditors, if any, an amount equal to the aggregate liquidation
preference of the Preferred Trust Securities plus accrued and unpaid
distributions thereon to the date of payment. If this liquidation distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate liquidation distribution, then the amounts payable by
the Trust on the Preferred Trust Securities shall be paid on a pro rata basis.
FPL Group, as holder of the Common Trust Securities, will be entitled to receive
distributions upon any dissolution pro rata with the holders of the Preferred
Trust Securities, except that if an event of default (or event that, with the
lapse of time or giving of notice, would become such an event of default) has
occurred and is continuing under the Subordinated Indenture, the Preferred Trust
Securities will have a preference over the Common Trust Securities. (Trust
Agreement, Section 9.04).
EVENTS OF DEFAULT; NOTICE. Any one of the following events will be an
event of default under the Trust Agreement whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body:
(1) the occurrence of an event of default as described in the Subordinated
Indenture;
(2) default by the Trust in the payment of any distribution when it
becomes due and payable, and continuation of that default for a period
of 30 days;
(3) default by the Trust in the payment of any redemption price, plus
accrued and unpaid distributions, of any Preferred Trust Security or
Common Trust Security when it becomes due and payable;
(4) default in the performance, or breach, in any material respect, of any
covenant or warranty of the trustees in the Trust Agreement which is
not dealt with above, and continuation of that default or breach for a
period of 90 days after written notice to the Trust, the defaulting
trustee under the Trust Agreement and FPL Group by the holders of
Preferred Trust Securities having at least 33% of the total
liquidation preference amount of the outstanding Preferred Trust
Securities. However, the holders of Preferred Trust Securities will be
deemed to have agreed to an extension of the 90 day period if
corrective action is initiated by any of the trustees within such
period and is diligently pursued in good faith; or
(5) the occurrence of certain events of bankruptcy or insolvency with
respect to the Trust. (Trust Agreement, Section 1.01).
28
Within 90 days after the occurrence of any default known to the
Property Trustee, the Property Trustee shall transmit to the holders of
Preferred Trust Securities, FPL Group and the Administrative Trustees notice of
any such default, unless that default will have been cured or waived. (Trust
Agreement, Section 8.02).
A holder of Preferred Trust Securities may directly institute a
proceeding to enforce payment when due to the holder of the Preferred Trust
Securities of the principal of or interest on Junior Subordinated Debentures
having a principal amount equal to the aggregate liquidation preference amount
of the holder's Preferred Trust Securities. The holders of Preferred Trust
Securities have no other rights to exercise directly any other remedies
available to the holder of the Junior Subordinated Debentures unless the
trustees under the Trust Agreement fail to do so. (Trust Agreement, Section
6.01(a)).
REMOVAL OF TRUSTEES. Unless an event of default under the Subordinated
Indenture has occurred and is continuing, the holder of the Common Trust
Securities may remove any trustee under the Trust Agreement at any time. If an
event of default under the Subordinated Indenture has occurred and is
continuing, the holders of a majority of the total liquidation preference amount
of the outstanding Preferred Trust Securities may remove the Property Trustee or
the Delaware Trustee, or both of them. The holder of the Common Trust Securities
may remove any Administrative Trustee at any time. Any resignation or removal of
a trustee under the Trust Agreement will take effect only on the acceptance of
appointment by the successor trustee. (Trust Agreement, Section 8.10).
Holders of Preferred Trust Securities will have no right to appoint or
remove the Administrative Trustees of the Trust, who may be appointed, removed
or replaced solely by FPL Group as the holder of the Common Trust Securities.
(Trust Agreement, Section 8.10).
VOTING RIGHTS. Except as provided below and under "Description of the
Preferred Trust Securities Guarantee--Modification and Assignment," and as
otherwise required by law or the Trust Agreement, the holders of Preferred Trust
Securities will have no voting rights.
While Junior Subordinated Debentures are held by the Property Trustee,
the Property Trustee shall not:
(1) direct the time, method and place to conduct any proceeding for any
remedy available to the Subordinated Indenture Trustee (as such term
is defined below under "Description of the Junior Subordinated
Debentures and the Subordinated Guarantee--General"), or execute any
trust or power conferred on the Subordinated Indenture Trustee with
respect to the Junior Subordinated Debentures;
(2) waive any past default under the Subordinated Indenture;
(3) exercise any right to rescind or annul a declaration that the
principal of all the Junior Subordinated Debentures will be due and
payable; or
(4) consent to any amendment, modification or termination of the
Subordinated Indenture or the Junior Subordinated Debentures, where
that consent will be required;
without, in each case, obtaining the prior approval of the holders of Preferred
Trust Securities having at least a majority of the aggregate liquidation
preference amount of all outstanding Preferred Trust Securities. Where a consent
of each holder of Junior Subordinated Debentures affected is required, no
consent shall be given by the Property Trustee without the prior consent of each
holder of the Preferred Trust Securities affected. The Property Trustee shall
not revoke any action previously authorized or approved by a vote of the holders
of Preferred Trust Securities, except pursuant to the subsequent vote of the
holders of Preferred Trust Securities. (Trust Agreement, Section 6.01(b)). If
the Property Trustee fails to enforce its rights, as holder, under the Junior
Subordinated Debentures or the Trust Agreement, a holder of the Preferred Trust
Securities may institute a legal proceeding directly against FPL Group or FPL
Group Capital, as the case may be, to enforce the Property Trustee's rights
under the Junior Subordinated Debentures or the Trust Agreement without first
instituting any legal proceeding against the Property Trustee or anyone else.
(Trust Agreement, Section 6.01(a)). The Property Trustee shall notify all
holders of Preferred Trust Securities of any notice of default received from the
Subordinated Indenture Trustee. The Property Trustee shall not take any action
approved by the consent of the holders without an opinion of counsel experienced
29
in those matters to the effect that the Trust will be classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes on account of that action. (Trust Agreement, Section
6.01(b)).
Holders of Preferred Trust Securities may give any required approval at
a meeting convened for such purpose or by written consent without prior notice.
(Trust Agreement, Section 6.06). The Administrative Trustees will give notice of
any meeting at which holders of Preferred Trust Securities are entitled to vote.
(Trust Agreement, Section 6.02).
No vote or consent of the holders of Preferred Trust Securities will be
required for the Trust to redeem and cancel Preferred Trust Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of Preferred Trust Securities are entitled
to vote or consent under any of the circumstances described above, any Preferred
Trust Securities that are owned by FPL Group Capital, FPL Group, any
Administrative Trustee or any affiliate of any of them, shall be treated as if
they were not outstanding for purposes of such vote or consent. (Trust
Agreement, Section 1.01).
AMENDMENTS. The Trust Agreement may be amended from time to time by a
majority of the Administrative Trustees and FPL Group, without the consent of
any holders of Preferred Trust Securities or the other trustees under the Trust
Agreement in order to:
(1) cure any ambiguity; correct or supplement any provision that may be
inconsistent with any other provision of the Trust Agreement or
amendment to the Trust Agreement; or make any other provisions with
respect to matters or questions arising under the Trust Agreement;
(2) change the name of the Trust; or
(3) modify, eliminate or add to any provisions of the Trust Agreement to
the extent necessary to ensure that the Trust will not be classified
for United States federal income tax purposes other than as a grantor
trust (and not an association taxable as a corporation) at any time
that any Preferred Trust Securities and Common Trust Securities are
outstanding or to ensure the Trust's exemption from the status of an
"investment company" under the Investment Company Act of 1940.
No amendment described above may materially adversely affect the
interests of any holder of Preferred Trust Securities or Common Trust Securities
without the applicable consents required pursuant to the following two
paragraphs. Any of the amendments of the Trust Agreement described in paragraph
(1) above shall become effective when notice of the amendment is given to the
holders of Preferred Trust Securities and Common Trust Securities in accordance
with the provisions of the Trust Agreement. (Trust Agreement, Section 10.03(a)).
Except as provided below, any provision of the Trust Agreement may be
amended by the Administrative Trustees and FPL Group with:
(1) the consent of holders of Preferred Trust Securities and Common Trust
Securities representing not less than a majority in aggregate
liquidation preference amount of the Preferred Trust Securities and
Common Trust Securities then outstanding; and
(2) receipt by the trustees of an opinion of counsel to the effect that
such amendment or the exercise of any power granted to the trustees in
accordance with the amendment will not affect the Trust's status as a
grantor trust for federal income tax purposes (and not an association
taxable as a corporation) or affect the Trust's exemption from the
status of an "investment company" under the Investment Company Act of
1940. (Trust Agreement, Section 10.03(b)).
Each affected holder of Preferred Trust Securities must consent to any
amendment to the Trust Agreement that:
30
(1) adversely changes the amount or timing of any distribution with
respect to Preferred Trust Securities or otherwise adversely affects
the amount of any distribution required to be made in respect of
Preferred Trust Securities and Common Trust Securities as of a
specified date;
(2) restricts the right of a holder of Preferred Trust Securities to
institute suit for the enforcement of any such payment on or after
that date; or
(3) modify the provisions described in clauses (1) and (2) above. (Trust
Agreement, Section 10.03(c)).
FORM, EXCHANGE AND TRANSFER. Preferred Trust Securities may be
exchanged for other Preferred Trust Securities in any authorized denomination
and of like tenor and aggregate liquidation preference. (Trust Agreement,
Section 5.04).
Subject to the terms of the Trust Agreement, Preferred Trust Securities
may be presented for exchange as provided above or for registration of transfer,
duly endorsed or accompanied by a duly executed instrument of transfer, at the
office of the Preferred Trust Security registrar. The Administrative Trustees
may designate FPL Group or FPL Group Capital or any affiliate of either of them
as the Preferred Trust Security registrar. The Property Trustee will initially
act as the Preferred Trust Security registrar and transfer agent. (Trust
Agreement, Section 5.08). No service charge will be made for any registration of
transfer or exchange of Preferred Trust Securities, but the Preferred Trust
Security registrar may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with the transfer or exchange. A
transfer or exchange will be made when the Preferred Trust Security registrar
and Administrative Trustees are satisfied with the documents of title and
identity of the person making the request. (Trust Agreement, Section 5.04). The
Administrative Trustees may at any time designate additional transfer agents or
rescind the designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that FPL Group will, or will cause
the Preferred Trust Security registrar to, maintain an office or agency in The
City of New York where Preferred Trust Securities may be transferred or
exchanged. (Trust Agreement, Section 5.08).
The Trust will not be required to:
(1) issue, register the transfer of, or exchange any Preferred Trust
Securities during the period beginning at the opening of business 15
calendar days before the mailing of a notice of redemption of any
Preferred Trust Securities called for redemption and ending at the
close of business on the day the notice is mailed; or
(2) register the transfer of or exchange any Preferred Trust Securities so
selected for redemption, in whole or in part, except the unredeemed
portion of any Preferred Trust Securities being redeemed in part.
(Trust Agreement, Section 5.04).
PAYMENT ON PREFERRED TRUST SECURITIES AND PAYING AGENT. Unless
otherwise stated in a prospectus supplement, payments in respect of the
Preferred Trust Securities will be made on the applicable distribution dates by
check mailed to the address of the holder entitled thereto as such address
appears on the Preferred Trust Security register. (Trust Agreement, Section
4.04). The paying agent shall initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee that is acceptable to the
Administrative Trustees, FPL Group Capital and FPL Group, which may be FPL Group
Capital or FPL Group. The paying agent may resign upon 30 days' written notice
to the Administrative Trustees, the Property Trustee, FPL Group Capital and FPL
Group. In the event that the Property Trustee shall no longer be the paying
agent, the Administrative Trustees shall appoint a successor, which shall be a
bank, trust company or affiliate of FPL Group reasonably acceptable to the
Property Trustee, FPL Group Capital and FPL Group to act as paying agent. (Trust
Agreement, Section 5.09).
DUTIES OF THE TRUSTEES. The Delaware Trustee will act as the resident
trustee in the State of Delaware and will have no other significant duties. The
Property Trustee will hold the Junior Subordinated Debentures on behalf of the
Trust and will maintain a payment account with respect to the Preferred Trust
Securities and Common Trust Securities, and will also act as trustee under the
Trust Agreement for the purposes of the Trust Indenture Act of 1939. (Trust
Agreement, Sections 2.06 and 2.07(b)).
31
The Administrative Trustees of the Trust are authorized and directed to
conduct the affairs of the Trust and to operate the Trust so that
(1) the Trust will not be deemed to be an "investment company" required to
be registered under the Investment Company Act of 1940,
(2) the Trust will not be taxed as a corporation and
(3) the Junior Subordinated Debentures will be treated as indebtedness of
FPL Group Capital for United States federal income tax purposes.
In this regard, FPL Group and the Administrative Trustees are authorized to take
any action, not inconsistent with applicable law, the certificate of trust or
the Trust Agreement, that FPL Group and the Administrative Trustees determine in
their discretion to be necessary or desirable for those purposes, as long as the
action does not materially adversely affect the interests of the holders of the
Preferred Trust Securities. (Trust Agreement, Section 2.07(d)).
MISCELLANEOUS. Holders of the Preferred Trust Securities have no
preemptive or similar rights. (Trust Agreement, Section 5.13).
NOTICES. Notices to holders of Preferred Trust Securities will be sent
by mail to the addresses of those holders as they appear in the security
register for those Preferred Trust Securities. (Trust Agreement, Section 6.02).
TITLE. The Property Trustee, the Delaware Trustee, the Administrative
Trustees, and the Preferred Trust Security registrar and transfer agent, and any
agent of the Property Trustee, the Delaware Trustee, the Administrative
Trustees, or the Preferred Trust Security registrar and transfer agent, may
treat the person in whose name a Preferred Trust Security is registered as the
absolute owner of that Preferred Trust Security for the purpose of receiving
distributions and all other purposes, regardless of any notice to the contrary.
(Trust Agreement, Section 5.06).
GOVERNING LAW. The Trust Agreement, the Preferred Trust Securities and
the Common Trust Securities will be governed by and construed in accordance with
the laws of the State of Delaware, without regard to conflict of laws principles
thereunder, except to the extent that the law of any other jurisdiction is
mandatorily applicable. (Trust Agreement, Section 10.05).
DESCRIPTION OF THE PREFERRED TRUST SECURITIES GUARANTEE
GENERAL. This section briefly summarizes some of the provisions of the
Preferred Trust Securities Guarantee Agreement that FPL Group will execute and
deliver for the benefit of the holders of the Preferred Trust Securities. This
summary does not contain a complete description of the Preferred Trust
Securities Guarantee Agreement. You should read this summary together with the
Preferred Trust Securities Guarantee Agreement for a complete understanding of
all the provisions. The form of Preferred Trust Securities Guarantee Agreement
has been previously filed with the SEC and is an exhibit to the registration
statement filed with the SEC of which this prospectus is a part. In addition,
the Preferred Trust Securities Guarantee Agreement will be qualified as an
indenture under the Trust Indenture Act of 1939 and is therefore subject to the
provisions of the Trust Indenture Act of 1939. You should read the Trust
Indenture Act of 1939 for a complete understanding of its provisions.
The Bank of New York will act as Preferred Trust Securities Guarantee
Trustee under the Preferred Trust Securities Guarantee Agreement and will hold
the Preferred Trust Securities Guarantee for the benefit of the holders of the
Preferred Trust Securities.
GENERAL TERMS OF THE PREFERRED TRUST SECURITIES GUARANTEE. FPL Group
will absolutely, irrevocably and unconditionally agree to make the guarantee
payments listed below in full to the holders of the Preferred Trust Securities
if they are not made by the Trust, as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust may have or assert. (Preferred
Trust Securities Guarantee Agreement, Section 5.01). The following payments will
be subject to the Preferred Trust Securities Guarantee (without duplication):
32
(1) any accrued and unpaid distributions required to be paid on Preferred
Trust Securities, to the extent the Trust has funds in the payment
account maintained by the Property Trustee legally available for these
payments at such time;
(2) the redemption price, plus all accrued and unpaid distributions to the
redemption date, for any Preferred Trust Securities called for
redemption by the Trust, to the extent the Trust has funds in the
payment account maintained by the Property Trustee legally available
for these payments at such time; and
(3) upon a voluntary or involuntary dissolution, winding-up or termination
of the Trust (except in connection with the distribution of Junior
Subordinated Debentures to the holders in exchange for Preferred Trust
Securities as provided in the Trust Agreement or upon a redemption of
all of the Preferred Trust Securities upon maturity or redemption of
the Junior Subordinated Debentures as provided in the Trust
Agreement), the lesser of:
(a) the aggregate of the liquidation preference amount and all
accrued and unpaid distributions on Preferred Trust Securities to
the date of payment, to the extent the Trust has funds in the
payment account maintained by the Property Trustee legally
available for these payments at such time; and
(b) the amount of assets of the Trust remaining available for
distribution to holders of Preferred Trust Securities in
liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as required by applicable law.
(Preferred Trust Securities Guarantee Agreement, Section 1.01). FPL Group's
obligation to make a guarantee payment may be satisfied by either making a
direct payment of the required amounts by FPL Group to the holders of Preferred
Trust Securities or causing the Trust to pay such amounts to those holders.
(Preferred Trust Securities Guarantee Agreement, Section 5.01).
The Preferred Trust Securities Guarantee will be a guarantee, subject
to certain subordination provisions, as to payment with respect to the Preferred
Trust Securities, but will not apply to any payment of distributions if and to
the extent that the Trust does not have funds legally available to make those
payments. (Preferred Trust Securities Guarantee Agreement, Sections 1.01 and
5.05). If neither FPL Group Capital nor FPL Group makes interest payments on the
Junior Subordinated Debentures held by the Trust, the Trust will not have funds
available to pay distributions on the Preferred Trust Securities.
The Preferred Trust Securities Guarantee is unsecured and will rank
subordinate and junior in right of payment to all other liabilities of FPL Group
(except those made pari passu or subordinate by their terms). (Preferred Trust
Securities Guarantee Agreement, Section 6.01). The Preferred Trust Securities
Guarantee Agreement does not limit FPL Group from incurring or issuing
additional debt or incurring other liabilities, whether secured or unsecured, or
making guarantees, senior to or equal in right of payment to the Preferred Trust
Securities Guarantee in the future. See "--Security and Ranking" below.
FPL Group will fully and unconditionally guarantee payments due on the
Preferred Trust Securities through a combination of the following:
(1) the Subordinated Guarantee;
(2) the rights of holders of Preferred Trust Securities to enforce FPL
Group's payment obligations under the Subordinated Guarantee;
(3) FPL Group's agreement to pay the expenses of the Trust; and
(4) the Preferred Trust Securities Guarantee.
33
No single one of the documents listed above standing alone or operating
in conjunction with fewer than all of the other documents constitutes the
guarantee by FPL Group. It is only the combined operation of these documents
that has the effect of providing a full and unconditional, but subordinated,
guarantee as to payment by FPL Group of the Preferred Trust Securities.
Except as otherwise stated in the related prospectus supplement, the
covenants in the Preferred Trust Securities Guarantee Agreement would not give
holders of the Preferred Trust Securities protection in the event of a
highly-leveraged transaction involving FPL Group.
SECURITY AND RANKING. The Preferred Trust Securities Guarantee will be
an unsecured obligation of FPL Group and will rank:
(1) subordinate and junior in right of payment to all other liabilities of
FPL Group, including the Subordinated Guarantee and the Debt
Securities Guarantee;
(2) equal in right of payment with the most senior preferred or preference
stock that may be issued by FPL Group and with any guarantee that may
be entered into by FPL Group in respect of any preferred or preference
stock of any affiliate of FPL Group; and
(3) senior to FPL Group common stock. (Preferred Trust Securities
Guarantee Agreement, Section 6.01).
The Trust Agreement provides that by accepting Preferred Trust
Securities, a holder agrees to the subordination provisions and other terms of
the Preferred Trust Securities Guarantee. (Trust Agreement, Section 5.02).
The Preferred Trust Securities Guarantee will be a guarantee of payment
and not of collection, that is, the guaranteed party may institute a legal
proceeding directly against FPL Group to enforce its rights under the Preferred
Trust Securities Guarantee without first instituting a legal proceeding against
anyone else. (Preferred Trust Securities Guarantee Agreement, Sections 5.04 and
5.05).
FPL Group is a holding company that derives substantially all of its
income from its operating subsidiaries. Therefore, the Preferred Trust
Securities Guarantee will be effectively subordinated to all indebtedness and
other liabilities, including trade payables, debt and preferred stock incurred
or issued by FPL Group's subsidiaries. Neither the Subordinated Indenture nor
the Preferred Trust Securities Guarantee Agreement places any limit on the
amount of liabilities, including debt or preferred stock, that FPL Group's
subsidiaries may issue, guarantee or otherwise incur.
EVENTS OF DEFAULT. An event of default under the Preferred Trust
Securities Guarantee Agreement will occur upon failure of FPL Group to perform
any of its payment obligations under the Preferred Trust Securities Guarantee
Agreement, which failure has not been cured within 90 days of receipt of notice
thereof. (Preferred Trust Securities Guarantee Agreement, Section 1.01). The
holders of the Preferred Trust Securities having a majority of the aggregate
liquidation preference of the Preferred Trust Securities have the right to:
(1) direct the time, method and place of conducting any proceeding for any
remedy available to the Preferred Trust Securities Guarantee Trustee
under the Preferred Trust Securities Guarantee Agreement, or
(2) direct the exercise of any trust or power conferred upon the Preferred
Trust Securities Guarantee Trustee under the Preferred Trust
Securities Guarantee Agreement. (Preferred Trust Securities Guarantee
Agreement, Section 5.04).
Any holder of the Preferred Trust Securities may enforce the Preferred
Trust Securities Guarantee, or institute a legal proceeding directly against FPL
Group to enforce the Preferred Trust Securities Guarantee Trustee's rights under
the Preferred Trust Securities Guarantee Agreement without first instituting a
legal proceeding against the Trust, the Preferred Trust Securities Guarantee
Trustee or anyone else. (Preferred Trust Securities Guarantee Agreement, Section
34
5.04). The holders of the Preferred Trust Securities having a majority of the
aggregate liquidation preference of the Preferred Trust Securities may waive any
past event of default and its consequences. (Preferred Trust Securities
Guarantee Agreement, Section 2.06).
FPL Group will be required to deliver to the Preferred Trust Securities
Guarantee Trustee an annual statement as to its compliance with all conditions
under the Preferred Trust Securities Guarantee Agreement. (Preferred Trust
Securities Guarantee Agreement, Section 2.04).
MODIFICATION AND ASSIGNMENT. No consent of holders of Preferred Trust
Securities is required for changes to the Preferred Trust Securities Guarantee
Agreement that do not materially adversely affect their rights. Except as
provided below, changes to the Preferred Trust Securities Guarantee Agreement
that materially adversely affect the rights of Preferred Trust Securities
require the prior approval of the holders of Preferred Trust Securities having
at least a majority of the aggregate liquidation preference amount of the
outstanding Preferred Trust Securities. Each affected holder of Preferred Trust
Securities must consent to any amendment to the Preferred Trust Securities
Guarantee Agreement that impairs the right of such holder to receive guarantee
payments under the Preferred Trust Securities Guarantee Agreement or to
institute suit for enforcement of any such payment. (Preferred Trust Securities
Guarantee Agreement, Section 8.01).
All guarantees and agreements contained in the Preferred Trust
Securities Guarantee Agreement will bind the successors, assigns, receivers,
trustees and representatives of FPL Group and will inure to the benefit of the
holders of the Preferred Trust Securities then outstanding. (Preferred Trust
Securities Guarantee Agreement, Section 8.02).
TERMINATION OF THE PREFERRED TRUST SECURITIES GUARANTEE. The Preferred
Trust Securities Guarantee Agreement will terminate and be of no further force
and effect upon:
(1) full payment of the redemption price, plus accrued and unpaid
distributions to the redemption date, for all the Preferred Trust
Securities;
(2) the distribution of Junior Subordinated Debentures to holders of the
Preferred Trust Securities in exchange for all of the Preferred Trust
Securities; or
(3) full payment of the amounts payable upon liquidation of the Trust.
However, the Preferred Trust Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time, as result of the
subordination provisions or any mistake or any judicial proceeding or otherwise,
any holder of Preferred Trust Securities must return any sums paid under the
Preferred Trust Securities or the Preferred Trust Securities Guarantee.
(Preferred Trust Securities Guarantee Agreement, Section 7.01).
GOVERNING LAW. The Preferred Trust Securities Guarantee Agreement
provides that it is to be governed by and construed in accordance with the laws
of the State of New York, without regard to conflict of laws principles
thereunder, except to the extent that the law of any other jurisdiction is
mandatorily applicable. (Preferred Trust Securities Guarantee Agreement, Section
8.06).
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
AND THE SUBORDINATED GUARANTEE
GENERAL. The Junior Subordinated Debentures, which the Property Trustee
will hold on behalf of the Trust as trust assets, will be issued by FPL Group
Capital in one or more series under an Indenture among FPL Group Capital, FPL
Group and The Bank of New York, as trustee. This Indenture, as it may be amended
and supplemented from time to time, is referred to in this prospectus as the
"Subordinated Indenture." The Bank of New York, as trustee under the
Subordinated Indenture, is referred to in this prospectus as the "Subordinated
Indenture Trustee." The Subordinated Indenture provides for the issuance from
time to time of subordinated debt in an unlimited amount. The Junior
Subordinated Debentures and all other subordinated debt issued previously or
hereafter under the Subordinated Indenture are collectively referred to in this
prospectus as the "Subordinated Indenture Securities."
35
This section briefly summarizes some of the terms of the Junior
Subordinated Debentures and the Subordinated Guarantee and some of the
provisions of the Subordinated Indenture. This summary does not contain a
complete description of the Junior Subordinated Debentures or the Subordinated
Guarantee. You should read this summary together with the Subordinated Indenture
and the officer's certificates or other documents establishing the Junior
Subordinated Debentures and the Subordinated Guarantee for a complete
understanding of all the provisions and for the definitions of some terms used
in this summary. The form of the Subordinated Indenture (which contains the form
of the Subordinated Guarantee), the form of officer's certificate that may be
used to establish a series of Junior Subordinated Debentures and a form of the
Junior Subordinated Debentures have been previously filed with the SEC, and are
exhibits to the registration statement. In addition, the Subordinated Indenture
will be qualified under the Trust Indenture Act of 1939 and is therefore subject
to the provisions of the Trust Indenture Act of 1939. You should read the Trust
Indenture Act of 1939 for a complete understanding of its provisions.
Junior Subordinated Debentures issued by FPL Group Capital to the Trust
will constitute a separate series under the Subordinated Indenture and will be
limited in aggregate principal amount to the sum of the aggregate liquidation
preference amount of the Preferred Trust Securities and the consideration paid
by FPL Group for the Common Trust Securities.
The Junior Subordinated Debentures will be unsecured, subordinated
obligations of FPL Group Capital which rank junior to all of FPL Group Capital's
Senior Indebtedness (as defined herein). The Junior Subordinated Debentures will
be unconditionally guaranteed by FPL Group as to payment of principal, and any
interest and premium, pursuant to a subordinated guarantee of FPL Group,
included in the Subordinated Indenture, which ranks junior to all of FPL Group's
Senior Indebtedness (as defined herein). See "--Subordinated Guarantee" below.
Each series of Junior Subordinated Debentures may have different terms.
FPL Group Capital will include some or all of the following information about a
specific series of Junior Subordinated Debentures in the prospectus
supplement(s) relating to those Junior Subordinated Debentures:
(1) the title of those Junior Subordinated Debentures,
(2) any limit upon the aggregate principal amount of those Junior
Subordinated Debentures,
(3) the date(s) on which FPL Group Capital will pay the principal of those
Junior Subordinated Debentures,
(4) the rate(s) of interest on those Junior Subordinated Debentures, or
how the rate(s) of interest will be determined, the date(s) from which
interest will accrue, the dates on which FPL Group Capital will pay
interest and the record date for any interest payable on any interest
payment date,
(5) the person to whom FPL Group Capital will pay interest on those Junior
Subordinated Debentures on any interest payment date, if other than
the person in whose name those Junior Subordinated Debentures are
registered at the close of business on the record date for that
interest payment,
(6) the place(s) at which or methods by which FPL Group Capital will make
payments on those Junior Subordinated Debentures and the place(s) at
which or methods by which the registered owners of those Junior
Subordinated Debentures may transfer or exchange those Junior
Subordinated Debentures and serve notices and demands to or upon FPL
Group Capital,
(7) the security registrar and any paying agent or agents for those Junior
Subordinated Debentures,
(8) any date(s) on which, the price(s) at which and the terms and
conditions upon which FPL Group Capital may, at its option, redeem
those Junior Subordinated Debentures, in whole or in part, and any
restrictions on those redemptions,
36
(9) any sinking fund or other provisions or options held by the registered
owners of those Junior Subordinated Debentures that would obligate FPL
Group Capital to repurchase or redeem those Junior Subordinated
Debentures,
(10) the denominations in which FPL Group Capital may issue those Junior
Subordinated Debentures, if other than denominations of $25 and any
integral multiple of $25,
(11) the currency or currencies in which FPL Group Capital may pay the
principal of or premium, if any, or interest on those Junior
Subordinated Debentures (if other than in U.S. dollars),
(12) if FPL Group Capital or a registered owner may elect to pay, or
receive, principal of or premium, if any, or interest on those Junior
Subordinated Debentures in a currency other than that in which those
Junior Subordinated Debentures are stated to be payable, the terms and
conditions upon which that election may be made,
(13) if FPL Group Capital will, or may, pay the principal of or premium, if
any, or interest on those Junior Subordinated Debentures in securities
or other property, the type and amount of those securities or other
property and the terms and conditions upon which FPL Group Capital or
a registered owner may elect to pay or receive those payments,
(14) if the amount payable in respect of principal of or premium, if any,
or interest on those Junior Subordinated Debentures may be determined
by reference to an index or other fact or event ascertainable outside
of the Subordinated Indenture, the manner in which those amounts will
be determined,
(15) the portion of the principal amount of those Junior Subordinated
Debentures that FPL Group Capital will pay upon declaration of
acceleration of the maturity of those Junior Subordinated Debentures,
if other than the entire principal amount of those Junior Subordinated
Debentures,
(16) any events of default with respect to those Junior Subordinated
Debentures and any covenants of FPL Group Capital for the benefit of
the registered owners of those Junior Subordinated Debentures, other
than those specified in the Subordinated Indenture,
(17) the terms, if any, pursuant to which those Junior Subordinated
Debentures may be exchanged for shares of capital stock or other
securities of any other entity,
(18) a definition of "Eligible Obligations" under the Subordinated
Indenture with respect to those Junior Subordinated Debentures
denominated in a currency other than U.S. dollars, and any other
provisions for the reinstatement of FPL Group Capital's indebtedness
in respect of those Junior Subordinated Debentures after their
satisfaction and discharge,
(19) if FPL Group Capital will issue those Junior Subordinated Debentures
in global form, necessary information relating to the issuance of
those Junior Subordinated Debentures in global form,
(20) if FPL Group Capital will issue those Junior Subordinated Debentures
as bearer securities, necessary information relating to the issuance
of those Junior Subordinated Debentures as bearer securities,
(21) any limits on the rights of the registered owners of those Junior
Subordinated Debentures to transfer or exchange those Junior
Subordinated Debentures or to register their transfer, and any related
service charges,
(22) any exceptions to the provisions governing payments due on legal
holidays or any variations in the definition of business day with
respect to those Junior Subordinated Debentures,
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(23) any collateral security, assurance, or guarantee for those Junior
Subordinated Debentures, in addition to, or any exceptions to, the
Subordinated Guarantee described under "--Subordinated Guarantee"
below,
(24) the designation of the trust to which the Junior Subordinated
Debentures are to be issued,
(25) the terms relating to any additional interest that may be payable as a
result of any tax, assessment or governmental charges, and
(26) any other terms of those Junior Subordinated Debentures that are not
inconsistent with the provisions of the Subordinated Indenture.
(Subordinated Indenture, Section 301).
Except as otherwise stated in the related prospectus supplement, the
covenants in the Subordinated Indenture would not give registered owners of
Junior Subordinated Debentures protection in the event of a highly-leveraged
transaction involving FPL Group Capital or FPL Group.
SUBORDINATION. The Junior Subordinated Debentures will be subordinate
and junior in right of payment to all Senior Indebtedness of FPL Group Capital.
(Subordinated Indenture, Article Fifteen). No payment of the principal
(including redemption and sinking fund payments) of, or interest, or premium, if
any, on the Junior Subordinated Debentures may be made by FPL Group Capital
until all holders of Senior Indebtedness of FPL Group Capital have been paid in
full (or provision has been made for such payment), if any of the following
occurs:
(1) certain events of bankruptcy, insolvency or reorganization of FPL
Group Capital;
(2) any Senior Indebtedness of FPL Group Capital is not paid when due
(after the expiration of any applicable grace period) and that default
continues without waiver; or
(3) any other default has occurred and continues without waiver (after the
expiration of any applicable grace period) pursuant to which the
holders of Senior Indebtedness of FPL Group Capital are permitted to
accelerate the maturity of such Senior Indebtedness. (Subordinated
Indenture, Section 1502).
Upon any distribution of assets of FPL Group Capital to creditors in
connection with any insolvency, bankruptcy or similar proceeding, all principal
of, and premium, if any, and interest due or to become due on all Senior
Indebtedness of FPL Group Capital must be paid in full before the holders of the
Junior Subordinated Debentures are entitled to receive or retain any payment
from such distribution. (Subordinated Indenture, Section 1502).
"Senior Indebtedness," when used with respect to FPL Group Capital or
FPL Group, means all of FPL Group Capital's or FPL Group's obligations, as the
case may be, whether presently existing or from time to time hereafter incurred,
created, assumed or existing, to pay principal, premium, interest, penalties,
fees and any other payment in respect of any of the following:
(1) obligations for borrowed money, including without limitation, such
obligations as are evidenced by credit agreements, notes, debentures,
bonds or other securities or instruments;
(2) capitalized lease obligations;
(3) all obligations of the types referred to in clauses (1) and (2) of
others which FPL Group or FPL Group Capital, as the case may be, has
assumed, endorsed, guaranteed, contingently agreed to purchase or
provide funds for the payment of, or otherwise becomes liable for,
under any agreement; or
(4) all renewals, extensions or refundings of obligations of the kinds
described in any of the preceding categories.
38
Any such indebtedness, renewal, extension or refunding, however, will not be
Senior Indebtedness if the instrument creating or evidencing it or the
assumption or guarantee of it provides that it is not superior in right of
payment to or is equal in right of payment with the Junior Subordinated
Debentures or the Subordinated Guarantee, as the case may be. Furthermore trade
accounts payable or long-term purchase obligations will not be Senior
Indebtedness. Senior Indebtedness will be entitled to the benefits of the
subordination provisions in the Subordinated Indenture irrespective of the
amendment, modification or waiver of any term of the Senior Indebtedness.
(Subordinated Indenture, Section 101).
FPL Group Capital is a holding company that derives substantially all
of its income from its operating subsidiaries. Therefore, the Subordinated Debt
Securities will be effectively subordinated to all indebtedness and other
liabilities, including trade payables, debt and preferred stock incurred or
issued by FPL Group Capital's subsidiaries. The Subordinated Indenture does not
place any limit on the amount of liabilities including debt or preferred stock,
that FPL Group Capital's subsidiaries may issue, guarantee or otherwise incur.
SUBORDINATED GUARANTEE. Pursuant to the Subordinated Guarantee, FPL
Group will unconditionally and irrevocably guarantee the payment of principal of
and any interest and premium, if any, on the Junior Subordinated Debentures,
when due and payable, whether at the stated maturity date, by declaration of
acceleration, call for redemption or otherwise, in accordance with the terms of
such Junior Subordinated Debentures and the Subordinated Indenture. The
Subordinated Guarantee will remain in effect until the entire principal of and
any premium, if any, and interest on the Junior Subordinated Debentures has been
paid in full or otherwise discharged in accordance with the provisions of the
Subordinated Indenture. (Subordinated Indenture, Article Fourteen).
The Subordinated Guarantee will be subordinate and junior in right of
payment to all Senior Indebtedness of FPL Group. (Subordinated Indenture,
Section 1402). No payment of the principal (including redemption and sinking
fund payments) of, or interest, or premium, if any, on, the Junior Subordinated
Debentures may be made by FPL Group under the Subordinated Guarantee until all
holders of Senior Indebtedness of FPL Group have been paid in full (or provision
has been made for such payment), if any of the following occurs:
(1) certain events of bankruptcy, insolvency or reorganization of FPL
Group;
(2) any Senior Indebtedness of FPL Group is not paid when due (after the
expiration of any applicable grace period) and that default continues
without waiver; or
(3) any other default has occurred and continues without waiver (after the
expiration of any applicable grace period) pursuant to which the
holders of Senior Indebtedness of FPL Group are permitted to
accelerate the maturity of such Senior Indebtedness. (Subordinated
Indenture, Section 1403).
Upon any distribution of assets of FPL Group to creditors in connection
with any insolvency, bankruptcy or similar proceeding, all principal of, and
premium, if any, and interest due or to become due on all Senior Indebtedness of
FPL Group must be paid in full before the holders of the Junior Subordinated
Debentures are entitled to receive or retain any payment from such distribution.
(Subordinated Indenture, Section 1403).
FPL Group is a holding company that derives substantially all of its
income from its operating subsidiaries. Therefore, the Subordinated Guarantee is
effectively subordinated to all indebtedness and other liabilities, including
trade payables, debt and preferred stock incurred or issued by FPL Group's
subsidiaries. The Subordinated Indenture does not place any limit on the amount
of liabilities, including debt or preferred stock, that FPL Group's subsidiaries
may issue, guarantee or otherwise incur.
PAYMENT AND PAYING AGENTS. Except as stated in the related prospectus
supplement, on each interest payment date FPL Group Capital will pay interest on
each Junior Subordinated Debenture to the person in whose name that Junior
Subordinated Debenture is registered as of the close of business on the record
date relating to that interest payment date. However, on the date that the
Junior Subordinated Debentures mature, FPL Group Capital will pay the interest
to the person to whom it pays the principal. Also, if FPL Group Capital has
defaulted in the payment of interest on any Junior Subordinated Debenture, it
may pay that defaulted interest to the registered owner of that Junior
Subordinated Debenture:
39
(1) as of the close of business on a date that the Subordinated Indenture
Trustee selects, which may not be more than 15 days or less than 10
days before the date that FPL Group Capital proposes to pay the
defaulted interest, or
(2) in any other lawful manner that does not violate the requirements of
any securities exchange on which that Junior Subordinated Debenture is
listed and that the Subordinated Indenture Trustee believes is
acceptable. (Subordinated Indenture, Section 307).
Unless otherwise stated in the related prospectus supplement, the
principal, premium, if any, and interest on the Junior Subordinated Debentures
at maturity will be payable when such Junior Subordinated Debentures are
presented at the main corporate trust office of The Bank of New York, as paying
agent, in The City of New York. FPL Group Capital and/or FPL Group may change
the place of payment on the Junior Subordinated Debentures, appoint one or more
additional paying agents, including itself, and remove any paying agent.
(Subordinated Indenture, Section 602).
TRANSFER AND EXCHANGE. Unless otherwise stated in the related
prospectus supplement, Junior Subordinated Debentures may be transferred or
exchanged at the main corporate trust office of The Bank of New York, as
security registrar, in The City of New York. FPL Group Capital may change the
place for transfer and exchange of the Junior Subordinated Debentures and may
designate one or more additional places for that transfer and exchange.
Except as otherwise stated in the related prospectus supplement, there
will be no service charge for any transfer or exchange of the Junior
Subordinated Debentures. However, FPL Group Capital may require payment of any
tax or other governmental charge in connection with any transfer or exchange of
the Junior Subordinated Debentures.
FPL Group Capital will not be required to transfer or exchange any
Junior Subordinated Debenture selected for redemption. Also, FPL Group Capital
will not be required to transfer or exchange any Junior Subordinated Debenture
during a period of 15 days before selection of Junior Subordinated Debentures to
be redeemed. (Subordinated Indenture, Section 305).
Unless otherwise stated in the related prospectus supplement, if Junior
Subordinated Debentures are distributed to holders of Preferred Trust Securities
in a dissolution of the Trust, the Junior Subordinated Debentures will be issued
in fully registered certificated form in the denominations and integral
multiples thereof in which the Preferred Trust Securities have been issued, and
they may be transferred or exchanged as described above. (Trust Agreement,
Section 9.04).
DEFEASANCE. FPL Group Capital and FPL Group may, at any time, elect to
have all of their obligations discharged with respect to all or a portion of any
Subordinated Indenture Securities (including the Junior Subordinated
Debentures). To do so, FPL Group Capital or FPL Group must irrevocably deposit
with the Subordinated Indenture Trustee or any paying agent, in trust:
(1) money in an amount that will be sufficient to pay all or that portion
of the principal, premium, if any, and interest due and to become due
on those Subordinated Indenture Securities, on or prior to their
maturity, or
(2) in the case of a deposit made prior to the maturity of that series of
Subordinated Indenture Securities,
(a) direct obligations of, or obligations unconditionally guaranteed
by, the United States and entitled to the benefit of its full
faith and credit that do not contain provisions permitting their
redemption or other prepayment at the option of their issuer, and
(b) certificates, depositary receipts or other instruments that
evidence a direct ownership interest in those obligations or in
any specific interest or principal payments due in respect of
those obligations that do not contain provisions permitting their
redemption or other prepayment at the option of their issuer, the
40
principal of and the interest on which, when due, without any
regard to reinvestment of that principal or interest, will
provide money that, together with any money deposited with or
held by the Subordinated Indenture Trustee, will be sufficient to
pay all or that portion of the principal, premium, if any, and
interest due and to become due on those Subordinated Indenture
Securities, on or prior to their maturity, or
(3) a combination of (1) and (2) that will be sufficient to pay all or
that portion of the principal, premium, if any, and interest due and
to become due on those Subordinated Indenture Securities, on or prior
to their maturity. (Subordinated Indenture, Section 701).
OPTION TO EXTEND INTEREST PAYMENT PERIOD. So long as no event of
default under the Subordinated Indenture has occurred and is continuing, FPL
Group Capital may extend the interest payment period from time to time on the
Junior Subordinated Debentures for one or more periods. (Subordinated Indenture,
Section 312). As a consequence, distributions on Preferred Trust Securities
would be deferred during any extension period. Interest would, however, continue
to accrue on the Junior Subordinated Debentures. During any extended interest
period, or for so long as an "Event of Default" under the Subordinated Indenture
resulting from any payment default or a payment default under the Preferred
Trust Securities Guarantee has occurred and is continuing, neither FPL Group nor
FPL Group Capital may:
(1) declare or pay any dividend or distribution on its capital stock;
(2) redeem, purchase, acquire or make a liquidation payment with respect
to any of its capital stock;
(3) pay any principal, interest or premium on, or repay, repurchase or
redeem any debt securities that are equal or junior in right of
payment with the Junior Subordinated Debentures or the Subordinated
Guarantee (as the case may be); or
(4) make any payments with respect to any guarantee of debt securities by
FPL Group if such guarantee is equal or junior in right of payment to
the Junior Subordinated Debentures or the Subordinated Guarantee (as
the case may be),
other than
(1) purchases, redemptions or other acquisitions of its capital stock in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors
or agents or a stock purchase or dividend reinvestment plan, or the
satisfaction of its obligations pursuant to any contract or security
outstanding on the date that the interest payment period is extended
requiring it to purchase, redeem or acquire its capital stock;
(2) as a result of a reclassification of its capital stock or the exchange
or conversion of all or a portion of one class or series of its
capital stock for another class or series of its capital stock;
(3) the purchase of fractional interests in shares of its capital stock
pursuant to the conversion or exchange provisions of its capital stock
or the security being converted or exchanged, or in connection with
the settlement of stock purchase contracts;
(4) dividends or distributions paid or made in its capital stock (or
rights to acquire its capital stock), or repurchases, redemptions or
acquisitions of capital stock in connection with the issuance or
exchange of capital stock (or of securities convertible into or
exchangeable for shares of its capital stock and distributions in
connection with the settlement of stock purchase contracts);
(5) redemptions, exchanges or repurchases of, or with respect to, any
rights outstanding under a shareholder rights plan or the declaration
or payment thereunder of a dividend or distribution of or with respect
to rights in the future;
41
(6) payments under any preferred trust securities guarantee or guarantee
of junior subordinated debentures executed and delivered by FPL Group
concurrently with the issuance by a trust of any preferred trust
securities, so long as the amount of payments made on any preferred
trust securities or junior subordinated debentures (as the case may
be) is paid on all preferred trust securities or junior subordinated
debentures (as the case may be) then outstanding on a pro rata basis
in proportion to the full distributions to which each series of
preferred trust securities or junior subordinated debentures (as the
case may be) is then entitled if paid in full;
(7) dividends or distributions by FPL Group Capital on its capital stock
owned by FPL Group, provided that FPL Group owns 100% of such capital
stock at the time of, or any record date for, such payment; or
(8) redemptions, purchases, acquisitions or liquidation payments by FPL
Group Capital with respect to its capital stock owned by FPL Group,
provided that FPL Group owns 100% of such capital stock at the time
of, or any record date for, such payment. (Subordinated Indenture,
Section 608).
Any extension period with respect to any securities of FPL Group
Capital similar to the Junior Subordinated Debentures or any other securities
issued under the Subordinated Indenture will also apply to payments of interest
on the Junior Subordinated Debentures.
Any extension period with respect to payment of interest on the Junior
Subordinated Debentures will, except as provided in (6) above, also apply to:
(1) payments of interest on all junior subordinated debt securities of FPL
Group Capital, including all other securities issued under the
Subordinated Indenture;
(2) distributions on the related preferred trust securities; and
(3) distributions on all other securities of the Trust or any other
subsidiary trust of FPL Group with terms substantially the same as
those of the Trust Agreement.
Before an extension period ends, FPL Group Capital may further extend
the interest payment period. No extension period as further extended may exceed
20 consecutive quarters. After any extension period and the payment of all
amounts then due, FPL Group Capital may select a new extended interest payment
period. No interest period may be extended beyond the maturity of the Junior
Subordinated Debentures. FPL Group Capital will give the Trust and the
Subordinated Indenture Trustee notice of its election of an extension period
prior to the earlier of (i) one business day before the record date for the
distribution on the Preferred Trust Securities which would occur if FPL Group
Capital did not make the election to extend or (ii) the date the Administrative
Trustees are required to give notice to any securities exchange or any other
applicable self-regulatory organization of the record date for such a
distribution. The Property Trustee shall send notice of that election to the
holders of Preferred Trust Securities.
ADDITIONAL INTEREST. So long as any Preferred Trust Securities remain
outstanding, if the Trust is required to pay any taxes, duties, assessments or
governmental charges imposed by the United States or any other taxing authority
on income derived from the interest payments on the Junior Subordinated
Debentures, then FPL Group Capital will pay as interest on the Junior
Subordinated Debentures any additional interest that may be necessary in order
that the net amounts received and retained by the Trust after the payment of
those taxes, duties, assessments or governmental charges will be the same as the
Trust would have had in the absence of such payment. (Subordinated Indenture,
Section 313).
REDEMPTION. For so long as the Trust is the holder of all the Junior
Subordinated Debentures, the proceeds of any redemption of Junior Subordinated
Debentures will be used by the Trust to redeem Preferred Trust Securities and
Common Trust Securities in accordance with their terms. (Trust Agreement,
Section 4.02(a)).
42
The redemption terms of the Junior Subordinated Debentures, if any,
will be set forth in a prospectus supplement. Unless set forth differently in a
prospectus supplement, and except with respect to Junior Subordinated Debentures
redeemable at the option of the holder, Junior Subordinated Debentures will be
redeemable upon notice between 30 and 60 days prior to the redemption date. If
less than all of the Junior Subordinated Debentures of any series or any tranche
thereof are to be redeemed, the Subordinated Indenture Trustee will select the
Junior Subordinated Debentures to be redeemed. In the absence of any provision
for selection, the Subordinated Indenture Trustee will choose a method of random
selection as it deems fair and appropriate. (Subordinated Indenture, Sections
403 and 404).
Junior Subordinated Debentures selected for redemption will cease to
bear interest on the redemption date. The paying agent will pay the redemption
price and any accrued interest once the Junior Subordinated Debentures are
surrendered for redemption. (Subordinated Indenture, Section 405). If only part
of a Junior Subordinated Debenture is redeemed, the Subordinated Indenture
Trustee will deliver a new Junior Subordinated Debenture of the same series for
the remaining portion without charge. (Subordinated Indenture, Section 406).
Any redemption at the option of FPL Group Capital may be 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 such money by the date fixed for redemption, neither FPL Group
Capital nor FPL Group will be required to redeem such Junior Subordinated
Debentures. (Subordinated Indenture, Section 404).
Subject to applicable law, including United States federal securities
law, FPL Group or its affiliates, including FPL Group Capital, may at any time
and from time to time purchase outstanding Junior Subordinated Debentures by
tender, in the open market or by private agreement.
CONSOLIDATION, MERGER, AND SALE OF ASSETS. Under the Subordinated
Indenture, neither FPL Group Capital nor FPL Group may consolidate with or merge
into any other entity or convey, transfer or lease its properties and assets
substantially as an entirety to any entity, unless:
(1) the entity formed by that consolidation, or the entity into which FPL
Group Capital or FPL Group, as the case may be, is merged, or the
entity that acquires or leases FPL Group Capital's or FPL Group's, as
the case may be, property and assets, is an entity organized and
existing under the laws of the United States, any state or the
District of Columbia and that entity expressly assumes FPL Group
Capital's or FPL Group's, as the case may be, obligations on all
Subordinated Indenture Securities and under the Subordinated
Indenture,
(2) immediately after giving effect to the transaction, no event of
default under the Subordinated Indenture and no event that, after
notice or lapse of time or both, would become an event of default
under the Subordinated Indenture exists, and
(3) FPL Group Capital or FPL Group, as the case may be, delivers an
officer's certificate and an opinion of counsel to the Subordinated
Indenture Trustee, as provided in the Subordinated Indenture.
(Subordinated Indenture, Section 1101).
The Subordinated Indenture does not prevent or restrict:
(1) any consolidation or merger after the consummation of which FPL Group
Capital or FPL Group would be the surviving or resulting entity;
(2) any consolidation of FPL Group Capital with FPL Group or any other
entity all of the outstanding voting securities of which are owned,
directly or indirectly, by FPL Group; or any merger of any such entity
into any other of such entities; or any conveyance or other transfer,
or lease, of properties or assets by any thereof to any other thereof;
(3) any conveyance or other transfer, or lease, of any part of the
properties or assets of FPL Group Capital or FPL Group which does not
constitute the entirety, or substantially the entirety, thereof; or
43
(4) the approval by FPL Group Capital or FPL Group of, or the consent by
FPL Group Capital or FPL Group to, any consolidation or merger to
which any direct or indirect subsidiary or affiliate of FPL Group, may
be a party or any conveyance, transfer or lease by any such subsidiary
or affiliate of any or all of its properties or assets. (Subordinated
Indenture, Section 1103.)
EVENTS OF DEFAULT. Each of the following is an event of default under
the Subordinated Indenture with respect to the Subordinated Indenture Securities
of any series:
(1) failure to pay interest on the Subordinated Indenture Securities of
that series within 30 days after it is due (provided, however, that a
valid extension of the interest period by FPL Group Capital will not
constitute an event of default),
(2) failure to pay principal or premium, if any, on the Subordinated
Indenture Securities of that series when it is due,
(3) failure to comply with any other covenant in the Subordinated
Indenture, other than a covenant that does not relate to that series
of Subordinated Indenture Securities, that continues for 90 days after
FPL Group Capital and FPL Group receive written notice of such failure
to comply from the Subordinated Indenture Trustee, or FPL Group
Capital, FPL Group and the Subordinated Indenture Trustee receive
written notice of such failure to comply from the registered owners of
at least 33% in principal amount of the Subordinated Indenture
Securities of that series,
(4) certain events of bankruptcy, insolvency or reorganization of FPL
Group Capital or FPL Group,
(5) with certain exceptions, the Subordinated Guarantee ceases to be
effective, is found by a judicial proceeding to be unenforceable or
invalid or is denied or disaffirmed by FPL Group, and
(6) any other event of default specified with respect to the Subordinated
Indenture Securities of that series. (Subordinated Indenture, Section
801).
In the case of the third event of default listed above, the
Subordinated Indenture Trustee may extend the grace period. In addition, if
holders of a particular series have given a notice of default, then holders of
at least the same percentage of Junior Subordinated Debentures of that series,
together with the Subordinated Indenture Trustee, may also extend the grace
period. The grace period will be automatically extended if FPL Group Capital or
FPL Group has initiated and is diligently pursuing corrective action in good
faith. (Subordinated Indenture, Section 801). An event of default with respect
to the Subordinated Indenture Securities of a particular series will not
necessarily constitute an event of default with respect to Subordinated
Indenture Securities of any other series issued under the Subordinated
Indenture.
REMEDIES. If an event of default applicable to the Subordinated
Indenture Securities of one or more series, but not applicable to all
outstanding Subordinated Indenture Securities, exists, then either the
Subordinated Indenture Trustee or the registered owners of at least 33% in
aggregate principal amount of the Subordinated Indenture Securities of each of
the affected series may declare the principal of and accrued but unpaid interest
on all the Subordinated Indenture Securities of that series to be due and
payable immediately. (Subordinated Indenture, Section 802).
If the event of default is applicable to all outstanding Subordinated
Indenture Securities, then only the Subordinated Indenture Trustee or the
registered owners of at least 33% in aggregate principal amount of all
outstanding Subordinated Indenture Securities of all series, voting as one
class, and not the registered owners of any one series, may make a declaration
of acceleration. (Subordinated Indenture, Section 802). However, the event of
default giving rise to the declaration relating to any series of Subordinated
Indenture Securities will be automatically waived, and that declaration and its
consequences will be automatically rescinded and annulled, if, at any time after
that declaration and before a judgment or decree for payment of the money due
has been obtained:
44
(1) FPL Group Capital or FPL Group deposits with the Subordinated
Indenture Trustee a sum sufficient to pay:
(a) all overdue interest on all Subordinated Indenture Securities of
that series,
(b) the principal of and any premium on any Subordinated Indenture
Securities of that series that have become due for reasons other
than that declaration, and interest that is then due,
(c) interest on overdue interest for that series, and
(d) all amounts due to the Subordinated Indenture Trustee under the
Subordinated Indenture, and
(2) any other event of default with respect to the Subordinated Indenture
Securities of that series has been cured or waived as provided in the
Subordinated Indenture. (Subordinated Indenture, Section 802).
Other than its obligations and duties in case of an event of default
under the Subordinated Indenture, the Subordinated Indenture Trustee is not
obligated to exercise any of its rights or powers under the Subordinated
Indenture at the request or direction of any of the registered owners, unless
those registered owners offer reasonable indemnity to the Subordinated Indenture
Trustee. (Subordinated Indenture, Section 903). If they provide this reasonable
indemnity, the registered owners of a majority in principal amount of any series
of Subordinated Indenture Securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Subordinated Indenture Trustee, or exercising any trust or power conferred on
the Subordinated Indenture Trustee, with respect to the Subordinated Indenture
Securities of that series. However, if an event of default under the
Subordinated Indenture relates to more than one series of Subordinated Indenture
Securities, only the registered owners of a majority in aggregate principal
amount of all affected series of Subordinated Indenture Securities, considered
as one class, will have the right to make that direction. Also, the direction
must not violate any law or the Subordinated Indenture, and may not expose the
Subordinated Indenture Trustee to personal liability in circumstances where its
indemnity would not, in the Subordinated Indenture Trustee's sole discretion, be
adequate. (Subordinated Indenture, Section 812).
No registered owner of Subordinated Indenture Securities of any series
will have any right to institute any proceeding under the Subordinated
Indenture, or exercise any remedy under the Subordinated Indenture, unless:
(1) that registered owner has previously given to the Subordinated
Indenture Trustee written notice of a continuing event of default with
respect to the Subordinated Indenture Securities of that series,
(2) the registered owners of a majority in aggregate principal amount of
the outstanding Subordinated Indenture Securities of all series in
respect of which an event of default under the Subordinated Indenture
exists, considered as one class, have made written request to the
Subordinated Indenture Trustee, and have offered reasonable indemnity
to the Subordinated Indenture Trustee to institute that proceeding in
its own name as trustee, and
(3) the Subordinated Indenture Trustee has failed to institute any
proceeding, and has not received from the registered owners of a
majority in aggregate principal amount of the outstanding Subordinated
Indenture Securities of all series in respect of which an event of
default under the Subordinated Indenture exists, considered as one
class, a direction inconsistent with that request, within 60 days
after that notice, request and offer. (Subordinated Indenture, Section
807).
However, these limitations do not apply to a suit instituted by a
registered owner of a Subordinated Indenture Security for the enforcement of
payment of the principal of or any premium, if any, or interest on that
Subordinated Indenture Security on or after the applicable due date specified in
that Subordinated Indenture Security. (Subordinated Indenture, Section 808).
45
Each of FPL Group Capital and FPL Group is required to deliver to the
Subordinated Indenture Trustee an annual statement as to its compliance with all
conditions and covenants applicable to it under the Subordinated Indenture.
(Subordinated Indenture, Section 606).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED TRUST SECURITIES.
If there is an event of default with respect to Junior Subordinated Debentures
held by the Trust, then the holders of Preferred Trust Securities issued by the
Trust will rely on the Property Trustee or the Subordinated Indenture Trustee,
acting for the benefit of the Property Trustee, to enforce the Property
Trustee's rights against FPL Group Capital and FPL Group as a holder of the
Junior Subordinated Debentures. However, a holder of Preferred Trust Securities
may enforce the Subordinated Indenture directly against FPL Group Capital to the
same extent, and upon the same conditions, as if the holder of Preferred Trust
Securities held a principal amount of Junior Subordinated Debentures equal to
the aggregate liquidation amount of its Preferred Trust Securities.
(Subordinated Indenture, Section 610).
Subject to their right to bring suit to enforce their right to payment,
the holders of Preferred Trust Securities would not be able to institute any
proceeding with respect to the Subordinated Indenture unless the Subordinated
Indenture Trustee has failed to do so for 60 days after a request of the holders
of at least 33% of the aggregate liquidation amount of outstanding Preferred
Trust Securities. Upon such failure, the holders of a majority of the aggregate
liquidation amount of the outstanding Preferred Trust Securities would have the
right to directly institute proceedings for enforcement of all other rights of
the Subordinated Indenture Trustee against FPL Group Capital to the fullest
extent permitted by law. (Subordinated Indenture, Sections 807, 808 and 812).
MODIFICATION AND WAIVER. Without the consent of any registered owner of
Subordinated Indenture Securities, FPL Group, FPL Group Capital and the
Indenture Trustee may amend or supplement the Subordinated Indenture for any of
the following purposes:
(1) to provide for the assumption by any permitted successor to FPL Group
Capital or FPL Group of FPL Group Capital's or FPL Group's, as the
case may be, obligations with respect to the Subordinated Indenture
and the Subordinated Indenture Securities in the case of a merger or
consolidation or a conveyance, transfer or lease of its properties and
assets substantially as an entirety,
(2) to add covenants of FPL Group Capital or FPL Group or to surrender any
right or power conferred upon FPL Group Capital or FPL Group by the
Subordinated Indenture,
(3) to add any additional events of default,
(4) to change, eliminate or add any provision of the Subordinated
Indenture, provided that if that change, elimination or addition will
materially adversely affect the interests of the registered owners of
Subordinated Indenture Securities of any series or tranche, that
change, elimination or addition will become effective with respect to
that series or tranche only
(a) when the required consent of the registered owners of
Subordinated Indenture Securities of that series or tranche has
been obtained, or
(b) when no Subordinated Indenture Securities of that series or
tranche remain outstanding under the Subordinated Indenture,
(5) to provide collateral security for all but not a part of the
Subordinated Indenture Securities,
(6) to establish the form or terms of Subordinated Indenture Securities of
any other series or tranche,
(7) to provide for the authentication and delivery of bearer securities
and the related coupons and for other matters relating to those bearer
securities,
(8) to accept the appointment of a successor Subordinated Indenture
Trustee or co-trustee with respect to the Subordinated Indenture
Securities of one or more series and to change any of the provisions
46
of the Subordinated Indenture as necessary to provide for the
administration of the trusts under the Subordinated Indenture by more
than one trustee,
(9) to add procedures to permit the use of a non-certificated system of
registration for the Subordinated Indenture Securities of all or any
series or tranche,
(10) to change any place where
(a) the principal of and premium, if any, and interest on all or any
series or tranche of Subordinated Indenture Securities are
payable,
(b) all or any series or tranche of Subordinated Indenture Securities
may be transferred or exchanged, and
(c) notices and demands to or upon FPL Group Capital or FPL Group in
respect of Subordinated Indenture Securities and the Subordinated
Indenture may be served, or
(11) to cure any ambiguity or inconsistency or to add or change any other
provisions with respect to matters and questions arising under the
Subordinated Indenture, provided those changes or additions may not
materially adversely affect the interests of the registered owners of
Subordinated Indenture Securities of any series or tranche.
(Subordinated Indenture, Section 1201).
The registered owners of a majority in aggregate principal amount of
the Subordinated Indenture Securities of all series then outstanding may waive
compliance by FPL Group Capital or FPL Group with certain restrictive provisions
of the Subordinated Indenture. (Subordinated Indenture, Section 607). The
registered owners of a majority in principal amount of the outstanding
Subordinated Indenture Securities of any series may waive any past default under
the Subordinated Indenture with respect to that series, except a default in the
payment of principal, premium, if any, or interest and a default with respect to
certain restrictive covenants or provisions of the Subordinated Indenture that
cannot be modified or amended without the consent of the registered owner of
each outstanding Subordinated Indenture Security of that series affected.
(Subordinated Indenture, Section 813). If the Trust holds Subordinated Indenture
Securities of any series, the Trust may not waive compliance, or any default in
compliance, by FPL Group Capital or FPL Group with any covenant or term
contained in, or any past default under, the Subordinated Indenture or the
Subordinated Indenture Securities of such series, without the approval of at
least a majority (or such greater percentage required by the Trust Agreement) in
aggregate liquidation preference amount of the outstanding Preferred Trust
Securities. (Subordinated Indenture, Sections 607 and 813).
In addition to any amendments described above, if the Trust Indenture
Act of 1939 is amended after the date of the Subordinated Indenture in a way
that requires changes to the Subordinated Indenture or in a way that permits
changes to, or the elimination of, provisions that were previously required by
the Trust Indenture Act of 1939, the Subordinated Indenture will be deemed to be
amended to conform to that amendment of the Trust Indenture Act of 1939 or to
make those changes, additions or eliminations. FPL Group Capital, FPL Group and
the Subordinated Indenture Trustee may, without the consent of any registered
owners, enter into supplemental indentures to make that amendment. (Subordinated
Indenture, Section 1201).
Except for any amendments described above, the consent of the
registered owners of a majority in aggregate principal amount of the
Subordinated Indenture Securities of all series then outstanding, considered as
one class, is required for all other modifications to the Subordinated
Indenture. However, if less than all of the series of Subordinated Indenture
Securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the registered owners of a majority in
aggregate principal amount of outstanding Subordinated Indenture Securities of
all directly affected series, considered as one class, is required. But, if FPL
Group Capital issues any series of Subordinated Indenture Securities in more
than one tranche and if the proposed supplemental indenture directly affects the
rights of the registered owners of Subordinated Indenture Securities of less
than all of those tranches, then the consent only of the registered owners of a
majority in aggregate principal amount of the outstanding Subordinated Indenture
Securities of all directly affected tranches, considered as one class, will be
required. However, none of those amendments or modifications may:
47
(1) change the dates on which the principal of or interest (except as
described above under "--Option to Extend Interest Payment Period") on
a Subordinated Indenture Security is due without the consent of the
registered owner of that Subordinated Indenture Security,
(2) reduce any Subordinated Indenture Security's principal amount or rate
of interest (or the amount of any installment of that interest) or
change the method of calculating that rate without the consent of the
registered owner of that Subordinated Indenture Security,
(3) reduce any premium payable upon the redemption of a Subordinated
Indenture Security without the consent of the registered owner of that
Subordinated Indenture Security,
(4) change the currency (or other property) in which a Subordinated
Indenture Security is payable without the consent of the registered
owner of that Subordinated Indenture Security,
(5) impair the right to sue to enforce payments on any Subordinated
Indenture Security on or after the date that it states that the
payment is due (or, in the case of redemption, on or after the
redemption date) without the consent of the registered owner of that
Subordinated Indenture Security,
(6) impair the right to receive payments under the Subordinated Guarantee
or to institute suit for enforcement of any such payment under the
Subordinated Guarantee,
(7) reduce the percentage in principal amount of the outstanding
Subordinated Indenture Securities of any series or tranche whose
owners must consent to an amendment, supplement or waiver without the
consent of the registered owner of each outstanding Subordinated
Indenture Security of that series or tranche,
(8) reduce the requirements for quorum or voting of any series or tranche
without the consent of the registered owner of each outstanding
Subordinated Indenture Security of that series or tranche, or
(9) modify certain of the provisions of the Subordinated Indenture
relating to supplemental indentures, waivers of certain covenants and
waivers of past defaults with respect to the Subordinated Indenture
Securities of any series or tranche, without the consent of the
registered owner of each outstanding Subordinated Indenture Security
affected by the modification.
A supplemental indenture that changes or eliminates any provision of
the Subordinated Indenture that has expressly been included only for the benefit
of one or more particular series or tranches of Subordinated Indenture
Securities, or that modifies the rights of the registered owners of Subordinated
Indenture Securities of that series or tranche with respect to that provision,
will not affect the rights under the Subordinated Indenture of the registered
owners of the Subordinated Indenture Securities of any other series or tranche.
So long as any Preferred Trust Securities are outstanding, the Subordinated
Indenture Trustee may not consent to any supplemental indenture without the
prior consent of the holders of a majority in aggregate liquidation preference
of all outstanding Preferred Trust Securities affected or, in the case of
changes described in clauses (1) through (9) immediately above, 100% in
aggregate liquidation preference of all such outstanding Preferred Trust
Securities affected. (Subordinated Indenture, Section 1202).
The Subordinated Indenture provides that, in order to determine whether
the registered owners of the required principal amount of the outstanding
Subordinated Indenture Securities have given any request, demand, authorization,
direction, notice, consent or waiver under the Subordinated Indenture, or
whether a quorum is present at the meeting of the registered owners of
Subordinated Indenture Securities, Subordinated Indenture Securities owned by
FPL Group Capital, FPL Group or any other obligor upon the Subordinated
Indenture Securities or any affiliate of FPL Group Capital, FPL Group or of that
other obligor (unless FPL Group Capital, FPL Group, that affiliate or that
obligor owns all Subordinated Indenture Securities outstanding under the
Subordinated Indenture, determined without regard to this provision) will be
disregarded and deemed not to be outstanding. (Subordinated Indenture, Section
101).
48
If FPL Group Capital or FPL Group solicits any action under the
Subordinated Indenture from registered owners of Subordinated Indenture
Securities, each of FPL Group Capital or FPL Group may, at its option, by
signing a written request to the Subordinated Indenture Trustee, fix in advance
a record date for determining the registered owners of Subordinated Indenture
Securities entitled to take that action. However, neither FPL Group Capital nor
FPL Group will be obligated to do this. If FPL Group Capital or FPL Group, as
the case may be, fixes such a record date, that action may be taken before or
after that record date, but only the registered owners of record at the close of
business on that record date will be deemed to be registered owners of
Subordinated Indenture Securities for the purposes of determining whether
registered owners of the required proportion of the outstanding Subordinated
Indenture Securities have authorized that action. For these purposes, the
outstanding Subordinated Indenture Securities will be computed as of the record
date. Any action of a registered owner of any Subordinated Indenture Security
under the Subordinated Indenture will bind every future registered owner of that
Subordinated Indenture Security, or any Subordinated Indenture Security
replacing that Subordinated Indenture Security, with respect to anything that
the Indenture Trustee, FPL Group Capital or FPL Group do, fail to do, or allow
to be done in reliance on that action, whether or not that action is noted upon
that Subordinated Indenture Security. (Subordinated Indenture, Section 104).
RESIGNATION OF SUBORDINATED INDENTURE TRUSTEE. The Subordinated
Indenture Trustee may resign at any time with respect to any series of
Subordinated Indenture Securities by giving written notice of its resignation to
FPL Group Capital and FPL Group. Also, the registered owners of a majority in
principal amount of the outstanding Subordinated Indenture Securities of one or
more series of Subordinated Indenture Securities may remove the Subordinated
Indenture Trustee at any time with respect to the Subordinated Indenture
Securities of that series, by delivering an instrument evidencing this action to
the Subordinated Indenture Trustee, FPL Group Capital and FPL Group. However, so
long as any Preferred Trust Securities remain outstanding, the Trust cannot
deliver an instrument evidencing this action without the consent of the holders
of a majority in aggregate liquidation preference of Preferred Trust Securities
outstanding. (Subordinated Indenture, Section 910). The resignation or removal
of the Subordinated Indenture Trustee and the appointment of a successor trustee
will not become effective until a successor trustee accepts its appointment.
Except with respect to a Subordinated Indenture Trustee appointed by
the registered owners of Subordinated Indenture Securities, the Subordinated
Indenture Trustee will be deemed to have resigned and the successor will be
deemed to have been appointed as trustee in accordance with the Subordinated
Indenture if:
(1) no event of default under the Subordinated Indenture or event that,
after notice or lapse of time, or both, would become an event of
default under the Subordinated Indenture exists, and
(2) FPL Group Capital and FPL Group have delivered to the Subordinated
Indenture Trustee resolutions of their Boards of Directors appointing
a successor trustee and that successor trustee has accepted that
appointment in accordance with the terms of the Subordinated
Indenture. (Subordinated Indenture, Section 910).
NOTICES. Notices to registered owners of Subordinated Indenture
Securities will be sent by mail to the addresses of those registered owners as
they appear in the security register for those Subordinated Indenture
Securities. (Subordinated Indenture, Section 106).
TITLE. FPL Group Capital, FPL Group, the Subordinated Indenture
Trustee, and any agent of FPL Group Capital, FPL Group or the Subordinated
Indenture Trustee, may treat the person in whose name a Subordinated Indenture
Security is registered as the absolute owner of that Subordinated Indenture
Security, whether or not that Subordinated Indenture Security is overdue, for
the purpose of making payments and for all other purposes, regardless of any
notice to the contrary. (Subordinated Indenture, Section 308).
GOVERNING LAW. The Subordinated Indenture and the Subordinated
Indenture Securities will be governed by, and construed in accordance with, the
laws of the State of New York, without regard to New York's conflict of law
principles, except to the extent that the law of any other jurisdiction is
mandatorily applicable. (Subordinated Indenture, Section 112).
49
INFORMATION CONCERNING THE TRUSTEES
FPL Group and its subsidiaries, including FPL Group Capital, also
maintain various banking and trust relationships with The Bank of New York. In
addition to acting as Subordinated Indenture Trustee, security registrar and
paying agent under the Subordinated Indenture, The Bank of New York acts, or
would act, as (i) Indenture Trustee, security registrar and paying agent under
the Indenture described under "Description of Offered Debt Securities" above,
(ii) Guarantee Trustee under the Guarantee Agreement described under
"Description of the Debt Securities Guarantee" above, (iii) purchase contract
agent under a purchase contract agreement described under "Description of Stock
Purchase Contracts and Stock Purchase Units" above, (iv) Preferred Trust
Securities Guarantee Trustee under the Preferred Trust Securities Guarantee
Agreement described under "Description of the Preferred Trust Securities
Guarantee" above and (v) Property Trustee under the Trust Agreement. The Bank of
New York (Delaware) acts as the Delaware Trustee under the Trust Agreement.
PLAN OF DISTRIBUTION
FPL Group, FPL Group Capital and the Trust may sell the securities
offered pursuant to this prospectus ("Offered Securities"):
(1) through underwriters or dealers,
(2) through agents, or
(3) directly to one or more purchasers.
THROUGH UNDERWRITERS OR DEALERS. If FPL Group, FPL Group Capital and/or
the Trust uses underwriters in the sale of the Offered Securities, the
underwriters will acquire the Offered Securities for their own account. The
underwriters may resell the Offered Securities in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The underwriters may sell the
Offered Securities directly or through underwriting syndicates represented by
managing underwriters. Unless otherwise stated in the prospectus supplement
relating to the Offered Securities, the obligations of the underwriters to
purchase those Offered Securities will be subject to certain conditions, and the
underwriters will be obligated to purchase all of those Offered Securities if
they purchase any of them. If FPL Group, FPL Group Capital and/or the Trust uses
a dealer in the sale, FPL Group, FPL Group Capital and/or the Trust will sell
the Offered Securities to the dealer as principal. The dealer may then resell
those Offered Securities at varying prices determined at the time of resale.
Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
THROUGH AGENTS. FPL Group, FPL Group Capital and/or the Trust may
designate one or more agents to sell the Offered Securities. Unless otherwise
stated in a prospectus supplement, the agents will agree to use their best
efforts to solicit purchases for the period of their appointment.
DIRECTLY. FPL Group, FPL Group Capital and/or the Trust may sell the
Offered Securities directly to one or more purchasers. In this case, no
underwriters, dealers or agents would be involved.
GENERAL INFORMATION. A prospectus supplement will state the name of any
underwriter, dealer or agent and the amount of any compensation, underwriting
discounts or concessions paid, allowed or reallowed to them. A prospectus
supplement will also state the proceeds to FPL Group, FPL Group Capital and/or
the Trust from the sale of the Offered Securities, any initial public offering
price and other terms of the offering of those Offered Securities.
FPL Group, FPL Group Capital and/or the Trust may authorize
underwriters, dealers or agents to solicit offers by certain institutions to
purchase the Offered Securities from FPL Group, FPL Group Capital and/or the
Trust at the public offering price and on the terms described in the related
prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future.
50
FPL Group, FPL Group Capital and/or the Trust may have agreements to
indemnify underwriters, dealers and agents against, or to contribute to payments
which the underwriters, dealers and agents may be required to make in respect
of, certain civil liabilities, including liabilities under the Securities Act of
1933.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus from FPL Group's Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated by reference herein, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
LEGAL OPINIONS
Steel Hector & Davis LLP, Miami, Florida and Thelen Reid & Priest LLP,
New York, New York, co-counsel to FPL Group, FPL Group Capital and the Trust,
will pass upon the legality of the Offered Securities for FPL Group, FPL Group
Capital and the Trust. Hunton & Williams, New York, New York, will pass upon the
legality of the Offered Securities for any underwriter, dealer or agent. Certain
matters of Delaware law relating to the validity of the Preferred Trust
Securities, the enforceability of the Trust Agreement and the creation of the
Trust will be passed upon by Reed Smith LLP, special Delaware counsel to FPL
Group, FPL Group Capital and the Trust. Thelen Reid & Priest LLP and Hunton &
Williams may rely as to all matters of Florida law upon the opinion of Steel
Hector & Davis LLP, and on the opinion of Reed Smith LLP, as to matters
involving the law of the State of Delaware in connection with the Preferred
Trust Securities. Steel Hector & Davis LLP may rely as to all matters of New
York law upon the opinion of Thelen Reid & Priest LLP, and on the opinion of
Reed Smith LLP, as to matters involving the law of the State of Delaware in
connection with the Preferred Trust Securities.
-----------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATiON INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. NEITHER FPL GROUP
CAPITAL, FPL GROUP NOR THE TRUST HAS AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH
ADDITIONAL OR DIFFERENT INFORMATION. NEITHER FPL GROUP CAPITAL, FPL GROUP NOR
THE TRUST IS MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE ON THE FRONT OF THOSE DOCUMENTS OR THAT THE INFORMATION INCORPORATED BY
REFERENCE IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THE DOCUMENT
INCORPORATED BY REFERENCE.
51
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$500,000,000
[FPL Group Capital Inc Logo]
3 1/4% Debentures, Series due April 11, 2006
The Debentures will be Absolutely, Irrevocably and
Unconditionally Guaranteed by
FPL Group, Inc.
-----------------------
PROSPECTUS SUPPLEMENT
-----------------------
JPMORGAN MORGAN STANLEY
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SCOTIA CAPITAL
APRIL 8, 2003
================================================================================