Filed pursuant to Rule 424(b)(2)
Registration Statement Nos. 333-116300,
333-116300-01 and 333-116300-02
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 19, 2004)
[FPL LOGO]
FLORIDA POWER & LIGHT COMPANY
FIRST MORTGAGE BONDS,
$400,000,000 5.65% SERIES DUE FEBRUARY 1, 2037
---------------------
Florida Power & Light Company will pay interest on the securities on
February 1 and August 1 of each year, beginning August 1, 2006. Florida Power &
Light Company may redeem some or all of the securities at any time before their
maturity date at the redemption price discussed under "Certain Terms of the
Offered Bonds--Redemption" beginning on page S-7 of this prospectus supplement.
Florida Power & Light Company does not plan to list the securities on any
securities exchange. The securities are secured by the lien of Florida Power &
Light Company's mortgage and rank equally with all of Florida Power & Light
Company's first mortgage bonds. The lien of the mortgage is discussed under
"Description of the Bonds--Security" on page 8 of the accompanying prospectus.
SEE "RISK FACTORS" BEGINNING ON PAGE S-3 TO READ ABOUT CERTAIN FACTORS YOU
SHOULD CONSIDER BEFORE MAKING AN INVESTMENT IN THESE SECURITIES.
Florida Power & Light Company's principal executive offices are located at
700 Universe Boulevard, Juno Beach, Florida 33408, telephone number (561)
694-4000, and its 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 or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
---------------------
PER FIRST MORTGAGE
BOND TOTAL
------------------ ------------
Price to Public................................. 99.288% $397,152,000
Underwriting Discount........................... 0.875% $ 3,500,000
Proceeds to Florida Power & Light Company
(before expenses)............................. 98.413% $393,652,000
In addition to the Price to Public set forth above, each purchaser will pay
an amount equal to the interest accrued, if any, on these securities from the
date that these securities are originally issued to the date that they are
delivered to that purchaser.
---------------------
These securities are expected to be delivered to the underwriters in
book-entry only form through The Depository Trust Company, on or about January
18, 2006.
---------------------
Joint Book-Running Managers
BANC OF AMERICA SECURITIES LLC LEHMAN BROTHERS
Co-Managers
Calyon Securities (USA) LaSalle Capital Markets Lazard Capital Markets
RBS Greenwich Capital Scotia Capital
BBVA Securities Inc. Fortis Securities LLC HSBC
HVB Capital Markets, Inc. SunTrust Robinson Humphrey
The date of this prospectus supplement is January 11, 2006.
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 AND IN ANY WRITTEN COMMUNICATION FROM US OR THE
UNDERWRITERS SPECIFYING THE FINAL TERMS OF THE OFFERING. NEITHER FLORIDA POWER &
LIGHT COMPANY ("FPL") NOR THE UNDERWRITERS HAS AUTHORIZED ANYONE ELSE TO PROVIDE
YOU WITH ADDITIONAL OR DIFFERENT INFORMATION. NEITHER FPL NOR THE UNDERWRITERS
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
PROSPECTUS SUPPLEMENT
Page
----
Risk Factors................................................................ S-3
Recent Developments......................................................... S-5
Use of Proceeds............................................................. S-5
Ratio of Earnings to Fixed Charges.......................................... S-6
Capitalization of FPL....................................................... S-6
Certain Terms of the Offered Bonds.......................................... S-6
Underwriting................................................................S-10
Experts.....................................................................S-12
Legal Opinions..............................................................S-12
PROSPECTUS
About this Prospectus..........................................................2
Risk Factors...................................................................2
FPL............................................................................4
Florida Power & Light Company Trust I and
Florida Power & Light Company Trust II.......................................4
Use of Proceeds................................................................5
Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Fixed Charges Plus Preferred Dividends...........................5
Where You Can Find More Information............................................6
Incorporation by Reference.....................................................6
Cautionary Statements..........................................................6
Description of the Bonds.......................................................7
Description of Preferred Stock................................................12
Description of Preferred Trust Securities.....................................15
Description of the Preferred Trust Securities Guarantee.......................23
Description of the Junior Subordinated Debentures.............................26
Information Concerning the Trustees...........................................38
Plan of Distribution..........................................................39
Experts.......................................................................40
Legal Opinions................................................................40
S-2
RISK FACTORS
The information in this section replaces the information in the "Risk
Factors" section beginning on page 2 of the accompanying prospectus.
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 supplement or in the accompanying
prospectus in order to evaluate an investment in the securities.
FPL IS SUBJECT TO COMPLEX LAWS AND REGULATIONS AND TO CHANGES IN LAWS AND
REGULATIONS AS WELL AS GOVERNMENTAL POLICIES AND REGULATORY ACTIONS, INCLUDING
INITIATIVES REGARDING RESTRUCTURING OF THE ENERGY INDUSTRY. FPL HOLDS FRANCHISE
AGREEMENTS WITH LOCAL MUNICIPALITIES AND COUNTIES, AND MUST RENEGOTIATE EXPIRING
AGREEMENTS. THESE FACTORS MAY HAVE A NEGATIVE IMPACT ON THE BUSINESS AND RESULTS
OF OPERATIONS OF FPL.
FPL is subject to changes in laws or regulations, including the Public
Utility Regulatory Policies Act of 1978, the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Atomic Energy Act of 1954, the Energy Policy
Act of 2005 and certain sections of the Florida statutes relating to public
utilities, changing governmental policies and regulatory actions, including
those of the Federal Energy Regulatory Commission, the Florida Public Service
Commission, 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 by FPL
of any and all costs that it considers excessive or imprudently incurred. The
regulatory process generally restricts FPL's ability to grow earnings and does
not provide any assurance as to achievement of earnings levels.
FPL is subject to extensive federal, state and local environmental
statutes, rules and regulations relating to air quality, water quality, waste
management, wildlife mortality, natural resources and health and safety that
could, among other things, restrict or limit the output of certain facilities or
the use of certain fuels required for the production of electricity and/or
require additional pollution control equipment and otherwise increase costs.
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 operates 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 will need to adapt to these changes and may face
increasing competitive pressure.
FPL's results of operations could be affected by its ability to renegotiate
franchise agreements with municipalities and counties in Florida.
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.
The operation of power generation facilities involves many risks, including
start up risks, breakdown or failure of equipment, transmission lines or
pipelines, use of new technology, the dependence on a specific fuel source,
including the supply and transportation of fuel, or the impact of unusual or
adverse weather conditions (including natural disasters such as hurricanes), as
well as the risk of performance below expected or contracted 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
S-3
addition to these risks, FPL's nuclear units face certain risks that are unique
to the nuclear industry including the ability to store and/or dispose of spent
nuclear fuel, as well as additional regulatory actions up to and including
shutdown of the units stemming from public safety concerns, whether at FPL's
plants, or at the plants of other nuclear operators.
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 COULD BE
NEGATIVELY AFFECTED.
FPL's ability to successfully and timely complete its power generation
facilities currently under construction, those projects yet to begin
construction or capital improvements to existing facilities within established
budgets is contingent upon many variables and subject to substantial risks.
Should any such efforts be unsuccessful, FPL could be subject to additional
costs, termination payments under committed contracts, and/or the write-off of
its investment in the project or improvement.
THE USE OF DERIVATIVE CONTRACTS BY FPL IN THE NORMAL COURSE OF BUSINESS COULD
RESULT IN FINANCIAL LOSSES THAT NEGATIVELY IMPACT THE RESULTS OF OPERATIONS OF
FPL.
FPL uses derivative instruments, such as swaps, options, futures and
forwards to manage its commodity and financial market risks. FPL could recognize
financial losses if a counterparty fails to perform. In the absence of actively
quoted market prices and pricing information from external sources, the
valuation of these derivative instruments involves management's judgment or use
of estimates. As a result, changes in the underlying assumptions or use of
alternative valuation methods could affect the reported fair value of these
contracts. In addition, FPL's use of such instruments could be subject to
prudency challenges and if found imprudent, cost recovery could be disallowed by
the Florida Public Service Commission.
BECAUSE FPL AND FPL GROUP, INC. RELY ON ACCESS TO CAPITAL MARKETS, THE INABILITY
TO ACCESS CAPITAL MARKETS ON FAVORABLE TERMS MAY LIMIT THE ABILITY OF FPL TO
GROW ITS BUSINESS AND WOULD LIKELY INCREASE INTEREST COSTS.
FPL as well as FPL Group, Inc., which owns all of the common stock of FPL,
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
and FPL Group to maintain their current credit ratings could affect FPL's
ability to raise capital on favorable terms, particularly during times of
uncertainty in the capital markets, which, in turn, could impact FPL's ability
to grow its business and would likely increase interest costs.
CUSTOMER GROWTH IN FPL'S SERVICE AREA AFFECTS ITS RESULTS OF OPERATIONS.
FPL's results of operations are affected by the growth in customer accounts
in its service area. Customer growth can be affected by population growth as
well as economic factors in Florida, including job and income growth, housing
starts and new home prices. Customer growth directly influences the demand for
electricity and the need for additional power generation and power delivery
facilities at FPL.
WEATHER AFFECTS FPL'S RESULTS OF OPERATIONS.
FPL's results of operations are affected by changes in the weather. Weather
conditions directly influence the demand for electricity and natural gas and
affect the price of energy commodities. FPL's results of operations can be
affected by the impact of severe weather which can be destructive, causing
outages and property damage, may affect fuel supply and could require additional
costs to be incurred. Recovery of these costs is subject to Florida Public
Service Commission approval.
S-4
FPL IS SUBJECT TO COSTS AND OTHER EFFECTS OF LEGAL PROCEEDINGS AS WELL AS
CHANGES IN OR ADDITIONS TO APPLICABLE TAX LAWS, RATES OR POLICIES, RATES OF
INFLATION, ACCOUNTING STANDARDS, SECURITIES LAWS OR CORPORATE GOVERNANCE
REQUIREMENTS.
FPL is 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 laws, rates or policies, rates of inflation, accounting
standards, securities laws or corporate governance requirements.
THREATS OF TERRORISM AND CATASTROPHIC EVENTS THAT COULD RESULT FROM TERRORISM
MAY IMPACT THE OPERATIONS OF FPL IN UNPREDICTABLE WAYS.
FPL is 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 United States economy, delay
in economic recovery in the United States, and the increased cost and adequacy
of security and insurance.
FPL'S ABILITY TO OBTAIN INSURANCE AND THE TERMS OF ANY AVAILABLE INSURANCE
COVERAGE COULD BE AFFECTED BY NATIONAL, STATE OR LOCAL EVENTS AND
COMPANY-SPECIFIC EVENTS.
FPL's ability to obtain insurance, and the cost of and coverage provided by
such insurance, could be affected by national, state or local events as well as
company-specific events.
FPL IS SUBJECT TO EMPLOYEE WORKFORCE FACTORS THAT COULD AFFECT THE BUSINESS AND
FINANCIAL CONDITION OF FPL.
FPL is subject to employee workforce factors, including loss or retirement
of key executives, availability of qualified personnel, collective bargaining
agreements with union employees and work stoppage that could affect the business
and financial condition of FPL.
RECENT DEVELOPMENTS
On December 18, 2005, FPL Group, which owns all of the common stock of FPL,
entered into an Agreement and Plan of Merger with Constellation Energy Group,
Inc. and its wholly owned subsidiary. Following the merger FPL would be an
indirect subsidiary of Constellation Energy. Consummation of the merger is
subject to customary closing conditions, including FPL Group and Constellation
Energy shareholder approvals, the expiration or termination of any waiting
period (and any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, approvals by public service or utility
commissions of specified states and approvals from the Federal Energy Regulatory
Commission and the Nuclear Regulatory Commission. On December 21, 2005, FPL
Group and FPL filed with the Securities and Exchange Commission a Current Report
on Form 8-K that provides additional information on the Agreement and Plan of
Merger, as well as other matters, and included a copy of that agreement as an
exhibit.
USE OF PROCEEDS
The information in this section adds to the information in the "Use of
Proceeds" section on page 5 of the accompanying prospectus. Please read these
two sections together.
FPL will add the net proceeds from the sale of the First Mortgage Bonds,
5.65% Series due February 1, 2037 ("Offered Bonds"), which are expected to be
approximately $392 million (after deducting the underwriting discount and other
offering expenses) to its general funds. FPL expects to use its general funds to
repay FPL's short-term borrowings and for other corporate purposes. As of
December 31, 2005, FPL's short-term indebtedness consisted of $1.16 billion of
commercial paper outstanding, which had maturities of up to 27 days and which
S-5
had annual interest rates ranging from 4.25% to 4.43%. FPL will temporarily
invest in short-term instruments any proceeds that are not immediately required
for these purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The information in this section adds to the information in the "Ratio of
Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges Plus Preferred
Dividends" section on page 5 of the accompanying prospectus. Please read these
two sections together. For the fiscal year ended December 31, 2004 and for the
nine months ended September 30, 2005, FPL's ratio of earnings to fixed charges
were 6.74 and 6.58, respectively.
CAPITALIZATION OF FPL
The following table shows FPL's capitalization as of September 30, 2005,
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.
ADJUSTED(A)
SEPTEMBER 30, ------------------------------------
2005 AMOUNT PERCENT
------------- ------------- -------------
(UNAUDITED)
(IN MILLIONS)
Common Shareholder's Equity................... $6,613 $6,613 64.3%
Long-term Debt (excluding current
maturities)................................. $3,271 $3,671 35.7%
------------- ------------- -------------
Total Capitalization..................... $9,884 $10,284 100.0%
============= ============= =============
- --------------------
<FN>
(a) To give effect to the issuance of the Offered Bonds offered by this
prospectus supplement. Adjusted amounts do not reflect the deduction of any
underwriting discounts or other offering expenses in connection with the
issuance of the Offered Bonds. Adjusted amounts also do not reflect any
possible issuance and sale from time to time after the date of this
prospectus supplement by FPL of additional securities.
</FN>
CERTAIN TERMS OF THE OFFERED BONDS
The information in this section adds to the information in the "Description
of the Bonds" section beginning on page 7 of the accompanying prospectus. Please
read these two sections together.
GENERAL. FPL will issue $400,000,000 aggregate principal amount of the
Offered Bonds as a new series of First Mortgage Bonds under the Mortgage (as
defined in the accompanying prospectus). The One Hundred Ninth Supplemental
Indenture, dated as of January 1, 2006, supplements the Mortgage and establishes
the specific terms of the Offered Bonds.
INTEREST AND PAYMENT. FPL will pay interest semi-annually on the Offered
Bonds at 5.65% per year. The Offered Bonds will mature on February 1, 2037. FPL
will pay interest on the Offered Bonds on February 1 and August 1 of each year
(each an "Interest Payment Date"). The first Interest Payment Date will be
August 1, 2006. The record date for interest payable on any Interest Payment
Date on the Offered Bonds shall be the close of business (1) on the business day
immediately preceding such Interest Payment Date so long as the Offered Bonds
remain in book-entry only form, or (2) on the 15th calendar day immediately
preceding each Interest Payment Date if the Offered Bonds do not remain in
S-6
book-entry only form. See "--Book-Entry Only Issuance--The Depository Trust
Company."
Interest on the Offered Bonds will accrue from and including the date of
original issuance to but excluding the first Interest Payment Date. Starting on
the first Interest Payment Date, interest on each Offered Bond will accrue from
and including the last Interest Payment Date to which FPL has paid, or duly
provided for the payment of, interest on that Offered Bond to but excluding the
next succeeding Interest Payment Date. No interest will accrue on an Offered
Bond for the day that the Offered Bond matures. The amount of interest payable
for any period will be computed on the basis of a 360-day year consisting of
twelve 30-day months. The amount of interest payable for any period shorter than
a full semi-annual period for which interest is computed will be computed on the
basis of the number of days in the period using 30-day calendar months.
FPL will pay interest on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest on the Offered Bonds at the rate of 6% per year.
ISSUANCE OF ADDITIONAL BONDS. As of September 30, 2005, FPL could have
issued under the Mortgage in excess of $5.5 billion of additional First Mortgage
Bonds based on unfunded Property Additions (as defined in the accompanying
prospectus) and in excess of $5.7 billion of additional First Mortgage Bonds
based on retired First Mortgage Bonds.
DIVIDEND RESTRICTIONS. As of September 30, 2005, no retained earnings were
restricted by provisions of the Mortgage described in the accompanying
prospectus which restrict the amount of retained earnings that FPL can use to
pay cash dividends on its common stock.
REDEMPTION. FPL may redeem any of the Offered Bonds at its option or if and
when required by the Mortgage. FPL may redeem any of the Offered Bonds at any
time or from time to time, on any date prior to their maturity (each a
"Redemption Date"). FPL will give notice of its intent to redeem Offered Bonds
at least 30 days prior to a Redemption Date. If FPL redeems all or any part of
the Offered Bonds, it will pay a redemption price ("Redemption Price") equal to
the sum of:
(1) 100% of the principal amount of the Offered Bonds being redeemed plus
(2) accrued and unpaid interest thereon, if any, to the Redemption Date
plus
(3) any applicable "make-whole premium."
The Redemption Price for the Offered Bonds will never be less than 100% of the
principal amount of those Offered Bonds plus accrued and unpaid interest on
those Offered Bonds to the Redemption Date.
The amount of the make-whole premium with respect to any Offered Bonds to
be redeemed will be equal to the excess, if any, of:
(1) the sum of the present values, calculated as of the Redemption Date,
of:
(a) each interest payment that, but for such redemption, would have
been payable on the Offered Bonds being redeemed on each Interest
Payment Date occurring after the Redemption Date (excluding any
accrued interest for the period prior to the Redemption Date);
and
(b) the principal amount that, but for such redemption, would have
been payable at the final maturity of the Offered Bonds being
redeemed; over
(2) the principal amount of the Offered Bonds being redeemed.
S-7
The present values of interest and principal payments referred to in clause
(1) above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield (as defined below) plus 20 basis
points.
FPL will appoint an independent investment banking institution of national
standing to calculate the make-whole premium; provided that Banc of America
Securities LLC or Lehman Brothers Inc. will make such calculation if (1) FPL
fails to make such appointment at least 30 days prior to the Redemption Date, or
(2) the institution so appointed is unwilling or unable to make such
calculation. If Banc of America Securities LLC or Lehman Brothers Inc. is to
make such calculation but is unwilling or unable to do so, then the Trustee (as
defined in the accompanying prospectus) will appoint an independent investment
banking institution of national standing to make such calculation. In any case,
the institution making such calculation is referred to in this prospectus
supplement as an "Independent Investment Banker."
For purposes of determining the make-whole premium, "Treasury Yield" means
a rate of interest per year equal to the weekly average yield to maturity of
United States Treasury Notes that have a constant maturity that corresponds to
the remaining term to maturity of the Offered Bonds to be redeemed, calculated
to the nearest 1/12th of a year (the "Remaining Term"). The Independent
Investment Banker will determine the Treasury Yield as of the third business day
immediately preceding the applicable Redemption Date.
The Independent Investment Banker will determine the weekly average yields
of United States Treasury Notes by reference to the most recent statistical
release published by the Federal Reserve Bank of New York and designated
"H.15(519) Selected Interest Rates" or any successor release (the "H.15
Statistical Release"). If the H.15 Statistical Release sets forth a weekly
average yield for United States Treasury Notes having a constant maturity that
is the same as the Remaining Term, then the Treasury Yield will be equal to such
weekly average yield. In all other cases, the Independent Investment Banker will
calculate the Treasury Yield by interpolation, on a straight-line basis, between
the weekly average yields on the United States Treasury Notes that have a
constant maturity closest to and greater than the Remaining Term and the United
States Treasury Notes that have a constant maturity closest to and less than the
Remaining Term (in each case as set forth in the H.15 Statistical Release). The
Independent Investment Banker will round any weekly average yields so calculated
to the nearest 1/100th of 1%, and will round upward for any figure of 1/200th of
1% or above. If weekly average yields for United States Treasury Notes are not
available in the H.15 Statistical Release or otherwise, then the Independent
Investment Banker will select comparable rates and calculate the Treasury Yield
by reference to those rates.
The Mortgage provides that if FPL at any time elects to redeem only a part
of the Offered Bonds, the Trustee will select the particular Offered Bonds to be
redeemed by proration among registered holders of the Offered Bonds or, in some
cases, by such other method that it deems proper as provided in the Mortgage.
However, if the Offered Bonds are solely registered in the name of Cede & Co.
and traded through DTC, then DTC will select the Offered Bonds to be redeemed in
accordance with its practices as described below in "--Book-Entry Only
Issuance--The Depository Trust Company."
If at the time notice of redemption is given, the redemption moneys are not
on deposit with the Trustee, then the redemption shall be subject to their
receipt before the Redemption Date and such notice shall be of no effect unless
such moneys are received.
Cash deposited under any provisions of the Mortgage (with certain
exceptions) may be applied to the purchase of First Mortgage Bonds of any
series.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY. The Offered Bonds
will trade through DTC. The Offered Bonds will be represented by one or more
global certificates and registered in the name of Cede & Co., DTC's nominee.
S-8
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 the post-trade settlement of
securities transactions among its participants through electronic computerized
book-entry transfers and pledges 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 organizations. 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 Offered Bonds within the DTC system must be made through
participants, which will receive a credit for the Offered Bonds on DTC's
records. The beneficial ownership interest of each purchaser will be recorded on
the appropriate participant's 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
Offered Bonds. Transfers of ownership in the Offered Bonds are to be
accomplished by entries made on the books of the participants acting on behalf
of beneficial owners. Beneficial owners will not receive certificates for their
Offered Bonds, except if use of the book-entry system for the Offered Bonds is
discontinued.
To facilitate subsequent transfers, all Offered Bonds deposited by
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of the Offered Bonds 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 Offered Bonds. DTC's records reflect only
the identity of the participants to whose accounts such Offered Bonds 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 Offered Bonds may wish to take certain
steps to augment transmission to them of notices of significant events with
respect to the Offered Bonds, such as redemptions, tenders, defaults and
proposed amendments to the Offered Bonds. Beneficial owners of the Offered Bonds
may wish to ascertain that the nominee holding the Offered Bonds has agreed to
obtain and transmit notices to the beneficial owners.
Redemption notices will be sent to Cede & Co., as registered holder of the
Offered Bonds. If less than all of the Offered Bonds are being redeemed, DTC's
practice is to determine by lot the amount of Offered Bonds of each participant
to be redeemed.
Neither DTC nor Cede & Co. will itself consent or vote with respect to
Offered Bonds, unless authorized by a participant in accordance with DTC's
procedures. Under its usual procedures, DTC would mail an omnibus proxy to FPL
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 Offered Bonds are credited on the record date. FPL 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 Offered Bonds.
Payments of redemption proceeds, principal of, and interest on the Offered
Bonds will be made to Cede & Co., or such other nominee as may be requested by
DTC. DTC's practice is to credit participants' accounts upon DTC's receipt of
funds and corresponding detail information from FPL or its agent, on the payable
date in accordance with their respective holdings shown on DTC's records.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices. Payments will be the responsibility of
participants and not of DTC, Deutsche Bank Trust Company Americas (the Trustee
under the Mortgage) or FPL, subject to any statutory or regulatory requirements
as may be in effect from time to time. 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. Disbursement of payments to participants is the
responsibility of DTC, and disbursement of payments to the beneficial owners is
the responsibility of participants.
S-9
Except as provided in this prospectus supplement, a beneficial owner will
not be entitled to receive physical delivery of the Offered Bonds. Accordingly,
each beneficial owner must rely on the procedures of DTC to exercise any rights
under the Offered Bonds.
DTC may discontinue providing its services as securities depositary with
respect to the Offered Bonds at any time by giving reasonable notice to FPL. In
the event no successor securities depositary is obtained, certificates for the
Offered Bonds will be printed and delivered. FPL may decide to replace DTC or
any successor depositary. Additionally, FPL may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary) with
respect to the Offered Bonds. In that event, certificates for the Offered Bonds
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 believes to be reliable. Neither FPL nor
any underwriter takes responsibility for the accuracy of this information.
UNDERWRITING
FPL is selling the Offered Bonds to the underwriters named in the table
below pursuant to an underwriting agreement dated the date of this prospectus
supplement between FPL and the underwriters named below, for whom Banc of
America Securities LLC and Lehman Brothers Inc. are acting as representatives.
Subject to certain conditions, FPL has agreed to sell to each of the
underwriters, and each of the underwriters has severally agreed to purchase, the
principal amount of Offered Bonds set forth opposite that underwriter's name in
the table below:
PRINCIPAL AMOUNT
UNDERWRITER OF OFFERED BONDS
----------- ----------------
Banc of America Securities LLC ................. $140,000,000
Lehman Brothers Inc. ........................... 140,000,000
Calyon Securities (USA) Inc. ................... 16,000,000
Greenwich Capital Markets, Inc. ................ 16,000,000
LaSalle Financial Services, Inc. ............... 16,000,000
Lazard Capital Markets LLC ..................... 16,000,000
Scotia Capital (USA) Inc. ...................... 16,000,000
BBVA Securities Inc. ........................... 8,000,000
Fortis Securities LLC .......................... 8,000,000
HSBC Securities (USA) Inc. ..................... 8,000,000
HVB Capital Markets, Inc. ...................... 8,000,000
SunTrust Capital Markets, Inc. ................. 8,000,000
------------
Total .................................... $400,000,000
============
Under the terms and conditions of the underwriting agreement, the
underwriters must buy all of the Offered Bonds 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
circumstances, the purchase commitment of the non-defaulting underwriters may be
increased or the underwriting agreement may be terminated. The underwriters will
sell the Offered Bonds to the public when and if the underwriters buy the
Offered Bonds from FPL.
FPL will compensate the underwriters by selling the Offered Bonds to them
at a price that is less than the price to the public by the amount of the
"Underwriting Discount" set forth in the table below. The underwriters will sell
the Offered Bonds to the public at the price to the public set forth on the
cover page of this prospectus supplement and may sell the Offered Bonds to
certain dealers at a price that is less than the price to the public by no more
than the amount of the "Initial Dealers' Concession" set forth in the table
below. The underwriters and such dealers may sell the Offered Bonds to certain
other dealers at a price that is less than the price to the public by no more
S-10
than the amounts of the "Initial Dealers' Concession" and the "Reallowed
Dealers' Concession" set forth in the table below.
(EXPRESSED AS A PERCENTAGE
OF PRINCIPAL AMOUNT)
--------------------
Underwriting Discount .................. 0.875%
Initial Dealers' Concession ............ 0.500%
Reallowed Dealers' Concession .......... 0.250%
An underwriter may reject offers for the Offered Bonds. After the initial
public offering of the Offered Bonds, the underwriters may change the offering
price and other selling terms of the Offered Bonds.
There is currently no established trading market for the Offered Bonds. The
underwriters have advised FPL that they intend to make a trading market in the
Offered Bonds but are not obligated to do so and may discontinue such
market-making activities at any time without notice. FPL cannot give any
assurance as to the maintenance of the trading market for, or the liquidity of,
the Offered Bonds.
In connection with the offering, Banc of America Securities LLC and Lehman
Brothers Inc. on behalf of the underwriters may purchase and sell the Offered
Bonds in the open market. These transactions may include over-allotment,
syndicate covering transactions and stabilizing transactions. Over-allotment
includes syndicate sales of Offered Bonds in excess of the principal amount of
Offered Bonds to be purchased by the underwriters in the offering, which creates
a syndicate short position. Syndicate covering transactions involve purchases of
the Offered Bonds in the open market after the distribution has been completed
in order to cover syndicate short positions. Stabilizing transactions consist of
certain bids or purchases of Offered Bonds made for the purpose of preventing or
retarding a decline in the market price of the Offered Bonds while the offering
is in progress.
The underwriters may also impose a penalty bid. Penalty bids permit the
underwriters to reclaim an initial dealers' concession from a syndicate member
when Banc of America Securities LLC or Lehman Brothers Inc., in covering
syndicate short positions or making stabilizing purchases, repurchases the
Offered Bonds originally sold by that syndicate member.
Any of these activities may cause the price of the Offered Bonds to be
higher than the price that otherwise would exist in the open market in the
absence of such transactions. These transactions may be effected in the
over-the-counter market or otherwise and, if commenced, may be discontinued at
any time.
Certain of the underwriters will make the Offered Bonds 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 those underwriters and their customers and is not a party
to any transactions. Market Axess Inc., a registered broker-dealer, will receive
compensation from those underwriters based on transactions those underwriters
conduct through the system. Those underwriters will make the Offered Bonds
available to their customers through Internet distributions, whether made
through a proprietary or third-party system, on the same terms as distributions
made through other channels.
FPL estimates that its expenses in connection with the sale of the Offered
Bonds, other than underwriting discounts, will be $1.7 million. This estimate
includes expenses relating to Florida taxes, printing, rating agency fees,
trustee's fees and legal fees, among other expenses.
FPL 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.
Lazard Capital Markets LLC ("Lazard") has entered into an agreement with
Mitsubishi UFJ Securities (USA), Inc. ("MUS (USA)") pursuant to which MUS (USA)
provides certain advisory and/or other services to Lazard, including in respect
S-11
of this offering. In return for this provision of such services by MUS (USA) to
Lazard, Lazard will pay to MUS (USA) a mutually agreed upon fee.
Certain of the underwriters or their affiliates may engage from time to
time in various general financing and commercial banking transactions with FPL
and its affiliates. Affiliates of certain of the underwriters are lenders to FPL
and/or affiliates of FPL under various short-term and multi-year credit
agreements.
EXPERTS
The information in this section replaces the information in the "Experts"
section on page 40 of the accompanying prospectus.
The consolidated financial statements as of December 31, 2004 and 2003, and
for each of the three years in the period ended December 31, 2004, and
management's report on the effectiveness of internal control over financial
reporting as of December 31, 2004, incorporated in the accompanying prospectus
by reference from FPL's Annual Report on Form 10-K for the year ended December
31, 2004 have been audited by Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their reports incorporated in the
accompanying prospectus by reference (which reports (1) express an unqualified
opinion on the financial statements and include an explanatory paragraph
referring to FPL's changes in 2003 in its methods of accounting for
special-purpose entities and for asset retirement obligations, (2) express an
unqualified opinion on management's assessment regarding the effectiveness of
internal control over financial reporting, and (3) express an unqualified
opinion on the effectiveness of internal control over financial reporting), and
have been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
LEGAL OPINIONS
The information in this section replaces the information in the "Legal
Opinions" section on page 40 of the accompanying prospectus.
Squire, Sanders & Dempsey L.L.P., Miami, Florida, and Thelen Reid & Priest
LLP, New York, New York, co-counsel to FPL, will pass upon the legality of the
Offered Bonds for FPL. Hunton & Williams LLP, New York, New York, will pass upon
the legality of the Offered Bonds for the underwriters. Thelen Reid & Priest LLP
and Hunton & Williams LLP may rely as to all matters of Florida law upon the
opinion of Squire, Sanders & Dempsey L.L.P., and Squire, Sanders & Dempsey
L.L.P. may rely as to all matters of New York law upon the opinion of Thelen
Reid & Priest LLP.
S-12
PROSPECTUS
$1,000,000,000
FLORIDA POWER & LIGHT COMPANY
FIRST MORTGAGE BONDS
PREFERRED STOCK
JUNIOR SUBORDINATED DEBENTURES
-------------------------------------
FLORIDA POWER & LIGHT COMPANY TRUST I
FLORIDA POWER & LIGHT COMPANY TRUST II
PREFERRED TRUST SECURITIES
GUARANTEED AS DESCRIBED IN THIS PROSPECTUS BY
FLORIDA POWER & LIGHT COMPANY
-------------------------------------
Each of Florida Power & Light Company, Florida Power & Light Company
Trust I and Florida Power & Light Company Trust II may offer from time to time
up to $1,000,000,000 of securities provided that the aggregate amount of
securities offered by all such issuers may not exceed $1,000,000,000.
Florida Power & Light Company, Florida Power & Light Company Trust I
and Florida Power & Light Company 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.
Florida Power & Light Company, Florida Power & Light Company Trust I
and Florida Power & Light Company 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
39 of this prospectus also provides more information on this topic.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS TO READ ABOUT
CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE MAKING AN INVESTMENT IN THESE
SECURITIES.
Florida Power & Light Company's, Florida Power & Light Company Trust
I's and Florida Power & Light Company 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.
August 19, 2004
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that Florida Power
& Light Company ("FPL"), Florida Power & Light Company Trust I and Florida Power
& Light Company Trust II have filed with the Securities and Exchange Commission
("SEC") using a "shelf" registration process. Florida Power & Light Company
Trust I and Florida Power & Light Company Trust II are each referred to in this
prospectus as the "Trust."
Under this shelf registration process, FPL may offer from time to time,
in one or more offerings, up to a total of $1,000,000,000 of first mortgage
bonds, junior subordinated debentures and preferred stock and the Trust may
offer from time to time, in one or more offerings, up to a total of
$1,000,000,000 of preferred trust securities, provided that the aggregate amount
of all such securities or combinations of such securities offered by FPL and the
Trust under the registration statement may not exceed $1,000,000,000.
This prospectus provides you with a general description of the
securities that FPL and/or the Trust may offer. Each time FPL and/or the Trust
sells securities, FPL 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.
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 IS SUBJECT TO COMPLEX LAWS AND REGULATIONS AND TO CHANGES IN LAWS AND
REGULATIONS, INCLUDING INITIATIVES REGARDING RESTRUCTURING OF THE ENERGY
INDUSTRY. FPL HOLDS FRANCHISE AGREEMENTS WITH LOCAL MUNICIPALITIES AND COUNTIES,
AND MUST RENEGOTIATE EXPIRING AGREEMENTS. THESE FACTORS MAY HAVE A NEGATIVE
IMPACT ON THE BUSINESS AND RESULTS OF OPERATIONS OF FPL.
FPL is 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 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 by FPL
of costs that it considers excessive or imprudently incurred. The regulatory
process generally restricts FPL's ability to grow earnings and does not provide
any assurance as to achievement of earnings levels.
FPL is subject to extensive federal, state and local environmental
statutes, rules and regulations relating to air quality, water quality, waste
management, wildlife mortality, natural resources and health and safety that
could, among other things, restrict or limit the output of certain facilities or
the use of certain fuels required for the production of electricity and/or
increase costs. 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.
2
FPL operates 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 will need to adapt to these changes and may face
increasing competitive pressure.
FPL's results of operations could be affected by its ability to
renegotiate franchise agreements with municipalities and counties in Florida.
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.
The operation of power generation facilities involves many risks,
including start up risks, breakdown or failure of equipment, transmission lines
or pipelines, use of new technology, 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 or
contracted 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's nuclear units face
certain risks that are unique to the nuclear industry including the ability to
dispose of spent nuclear fuel, as well as additional regulatory actions up to
and including shutdown of the units stemming from public safety concerns,
whether at FPL's plants or at the plants of other nuclear operators.
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 COULD BE
NEGATIVELY AFFECTED.
FPL's ability to successfully and timely complete its 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 could be subject to additional costs, termination payments
under committed contracts and/or the write-off of its investment in the project
or improvement.
THE USE OF DERIVATIVE CONTRACTS BY FPL IN THE NORMAL COURSE OF BUSINESS COULD
RESULT IN FINANCIAL LOSSES THAT NEGATIVELY IMPACT THE RESULTS OF OPERATIONS OF
FPL.
FPL uses derivative instruments, such as swaps, options, futures and
forwards to manage its commodity and financial market risks. FPL could recognize
financial losses if a counterparty fails to perform. In the absence of actively
quoted market prices and pricing information from external sources, the
valuation of these derivative instruments involves management's judgment or use
of estimates. As a result, changes in the underlying assumptions or use of
alternative valuation methods could affect the reported fair value of these
contracts. In addition, FPL's use of such instruments could be subject to
prudency challenges and if found imprudent, cost recovery could be disallowed by
the Florida Public Service Commission.
BECAUSE FPL AND FPL GROUP RELY ON ACCESS TO CAPITAL MARKETS, THE INABILITY TO
ACCESS CAPITAL MARKETS ON FAVORABLE TERMS MAY LIMIT THE ABILITY OF FPL TO GROW
ITS BUSINESS AND WOULD LIKELY INCREASE INTEREST COSTS.
FPL as well as FPL Group, Inc., which owns all of the common stock of
FPL, 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
and FPL Group to maintain their current credit ratings could affect FPL's
ability to raise capital on favorable terms, particularly during times of
uncertainty in the capital markets which, in turn, could impact FPL's ability to
grow its business and would likely increase its interest costs.
WEATHER CONDITIONS CAN AFFECT FPL'S RESULTS OF OPERATIONS.
FPL'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. In addition, severe weather can be
3
destructive, causing outages and/or property damage, which could require
additional costs to be incurred.
FPL IS 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, ACCOUNTING STANDARDS, SECURITIES LAWS AND CORPORATE
GOVERNANCE REQUIREMENTS.
FPL is 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, accounting
standards, securities laws or corporate governance requirements.
THREATS OF TERRORISM AND CATASTROPHIC EVENTS THAT COULD RESULT FROM TERRORISM
MAY IMPACT THE OPERATIONS OF FPL IN UNPREDICTABLE WAYS.
FPL is 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 TO OBTAIN INSURANCE AND THE TERMS OF ANY AVAILABLE INSURANCE
COVERAGE COULD BE AFFECTED BY NATIONAL AND COMPANY-SPECIFIC EVENTS.
FPL'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 IS SUBJECT TO EMPLOYEE WORKFORCE FACTORS THAT COULD AFFECT THE BUSINESS AND
FINANCIAL CONDITION OF FPL.
FPL is 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.
FPL
FPL was incorporated under the laws of Florida in 1925 and is a
rate-regulated utility engaged in the generation, transmission, distribution and
sale of electric energy. FPL supplies electric service throughout most of the
east and lower west coasts of the State of Florida, serving a population of more
than 8 million. During 2003, FPL served approximately 4.1 million customer
accounts. FPL Group, Inc. owns all of FPL's common stock. 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.
FLORIDA POWER & LIGHT COMPANY TRUST I AND
FLORIDA POWER & LIGHT COMPANY TRUST II
Florida Power & Light Company Trust I and Florida Power & Light Company
Trust II are Delaware statutory trusts created pursuant to separate trust
agreements among FPL 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. 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 as trust assets. All of the common
trust securities will be owned by FPL. 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
4
preferred trust securities if there is a default under the trust agreement. The
Trust has a term of approximately 50 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 will add the
net proceeds from the sale of its securities to its general funds. FPL uses its
general funds for corporate purposes, including to repay, redeem or purchase
outstanding debt and preferred stock, to repay short-term borrowings and to
finance the acquisition or construction of additional electric facilities and
capital improvements to and maintenance of existing facilities. FPL will
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. FPL will add the net proceeds from the sale of such
junior subordinated debentures to its general funds, which will be used as
described above.
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES PLUS PREFERRED DIVIDENDS
The following table shows FPL's ratio of earnings to fixed charges for
each of its last five fiscal years:
Years Ended December 31,
------------------------------------------
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
7.23 7.47 6.44 6.02 6.26
The following table shows FPL's ratio of earnings to combined fixed
charges and preferred stock dividends for each of its last five fiscal years:
Years Ended December 31,
------------------------------------------
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
6.52 6.61 5.77 5.37 5.53
FPL's ratio of earnings to fixed charges and ratio of earnings to
combined fixed charges and preferred stock dividends for the six months ended
June 30, 2004 were 5.76 and 5.65, respectively.
5
WHERE YOU CAN FIND MORE INFORMATION
FPL files annual, quarterly and other reports and other information
with the SEC. You can read and copy any information filed by FPL 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. FPL also
maintains an Internet site (http://www.fpl.com).
No separate financial statements of the Trust are included in this
prospectus. FPL 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 and issuing its preferred trust securities and common trust
securities. FPL 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 and the Trust to "incorporate by reference" the
information that FPL files with the SEC, which means that FPL 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 files in the future with the SEC will
automatically update and supersede this information. FPL and the Trust are
incorporating by reference the documents listed below and any future filings FPL
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 and/or the
Trust sell all of these securities:
(1) FPL's Annual Report on Form 10-K for the year ended December 31, 2003;
(2) FPL's Quarterly Reports on Form 10-Q for the quarters ended March 31,
2004 and June 30, 2004; and
(3) FPL's Current Reports on Form 8-K filed with the SEC on March 1, 2004
and August 16, 2004.
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 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 and the Trust are hereby filing cautionary
statements identifying important factors that could cause FPL'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 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," "believe," "could,"
"estimated," "may," "plan," "potential," "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 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's actual results to differ
materially from those contained in forward-looking statements made by or on
behalf of FPL or the Trust.
6
Any forward-looking statement speaks only as of the date on which that
statement is made, and neither FPL 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 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's business in the future.
DESCRIPTION OF THE BONDS
GENERAL. FPL will issue these first mortgage bonds, in one or more
series, under its Mortgage and Deed of Trust dated as of January 1, 1944, with
Deutsche Bank Trust Company Americas, as Trustee, which has been amended and
supplemented in the past, may be supplemented prior to the issuance of these
first mortgage bonds, and which will be supplemented again by one or more
supplemental indentures relating to these first mortgage bonds. This Mortgage
and Deed of Trust, as amended and supplemented, is referred to in this
prospectus as the "Mortgage." These first mortgage bonds are referred to in this
prospectus as the "Bonds." All first mortgage bonds issued or to be issued under
the Mortgage, including the Bonds, are referred to herein as "First Mortgage
Bonds."
This section briefly summarizes some of the terms of the Bonds and some
of the provisions of the Mortgage and uses some terms that are not defined in
this prospectus but that are defined in the Mortgage. This summary is not
complete. You should read this summary together with the Mortgage and the
supplemental indenture establishing the Bonds for a complete understanding of
all the provisions. The Mortgage and the form of supplemental indenture 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 Mortgage 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.
Each series of Bonds may have different terms. FPL will include some or
all of the following information about a specific series of Bonds in the
prospectus supplement relating to those Bonds:
(1) the designation and series of those Bonds,
(2) the aggregate principal amount of those Bonds,
(3) the offering price of those Bonds,
(4) the date(s) on which those Bonds will mature,
(5) the interest rate(s) for those Bonds, or how the interest rate(s) will
be determined,
(6) the dates on which FPL will pay the interest on those Bonds,
(7) the denominations in which FPL may issue those Bonds, if other than
denominations of $1,000 or multiples of $1,000,
(8) the place where the principal of and interest on those Bonds will be
payable, if other than at Deutsche Bank Trust Company Americas in New
York City,
(9) the currency or currencies in which payment of the principal of and
interest on those Bonds may be made, if other than U.S. dollars,
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(10) the terms pursuant to which FPL may redeem any of those Bonds,
(11) whether all or a portion of those Bonds will be in global form, and
(12) any other terms or provisions relating to those Bonds that are not
inconsistent with the provisions of the Mortgage.
FPL will issue the Bonds in fully registered form without coupons,
unless otherwise stated in a prospectus supplement. A holder of Bonds may
exchange those Bonds, without charge, for an equal aggregate principal amount of
Bonds of the same series, having the same issue date and with identical terms
and provisions, unless otherwise stated in a prospectus supplement. A holder of
Bonds may transfer those Bonds without cost to the holder, other than for
applicable stamp taxes or other governmental charges, unless otherwise stated in
a prospectus supplement. FPL may issue all or some of the Bonds in "book-entry"
form, which means that they will be represented by global notes, instead of
certificates. If FPL issues global notes representing any Bonds, then a
depository selected by FPL will keep a record of the beneficial interests in
those global notes and record any transfers of those beneficial interests and
the depository, or its custodian, will hold those global notes. Any additional
requirements as to the form and method of exchange of Bonds will be described in
a prospectus supplement.
SPECIAL PROVISIONS FOR RETIREMENT OF BONDS. If, during any 12 month
period, any governmental body orders FPL to dispose of mortgaged property, or
buys mortgaged property from FPL, and FPL receives $10 million or more from the
sale or disposition, then, in most cases, FPL must use that money to redeem
First Mortgage Bonds. If this occurs, FPL may redeem First Mortgage Bonds of any
series that are redeemable at the redemption prices applicable to those First
Mortgage Bonds. If any Bonds are redeemable, the redemption prices applicable to
those Bonds will be set forth in a prospectus supplement.
SECURITY. The Mortgage secures the Bonds as well as all other First
Mortgage Bonds already issued under the Mortgage and still outstanding. FPL may
issue more First Mortgage Bonds in the future and those First Mortgage Bonds
will also be secured by the Mortgage. The Mortgage constitutes a first mortgage
lien on all of the properties and franchises that FPL owns, except as discussed
below.
The lien of the Mortgage is or may be subject to the following:
(1) leases of minor portions of FPL's property to others for uses that do
not interfere with FPL's business,
(2) leases of certain property that is not used in FPL's electric
business,
(3) Excepted Encumbrances, which include certain tax and real estate
liens, and specified rights, easements, restrictions and other
obligations, and
(4) vendors' liens, purchase money mortgages and liens on property that
already exist at the time FPL acquires that property.
The Mortgage does not create a lien on the following "excepted
property":
(1) cash and securities,
(2) certain equipment, materials or supplies and fuel (including nuclear
fuel unless it is expressly subjected to the lien of the Mortgage),
(3) automobiles and other vehicles,
(4) receivables, contracts, leases and operating agreements,
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(5) materials or products, including electric energy, that FPL generates,
produces or purchases for sale or use by FPL, and
(6) timber, minerals, mineral rights and royalties.
The Mortgage will generally also create a lien on property that FPL
acquires after the date of this prospectus, other than "excepted property."
However, if FPL consolidates or merges with, or sells substantially all of its
assets to, another corporation, the lien created by the Mortgage will generally
not cover the property of the successor company, other than the property that it
acquires from FPL and improvements, replacements and additions to that property.
The Mortgage provides that the Trustee has a lien on the mortgaged
property for the payment of its reasonable compensation and expenses and for
indemnity against certain liabilities. This lien takes priority over the lien
securing the Bonds.
ISSUANCE OF ADDITIONAL BONDS. FPL may issue an unlimited amount of
First Mortgage Bonds under the Mortgage so long as it meets the issuance tests
set forth in the Mortgage, which are generally described below. FPL may issue
Bonds from time to time in an amount equal to:
(1) 60% of unfunded Property Additions after adjustments to offset
retirements,
(2) the amount of retired First Mortgage Bonds or Qualified Lien Bonds,
and
(3) the amount of cash that FPL deposits with the Trustee.
Property Additions generally include the following:
(1) plants, lines, pipes, mains, cables, machinery, boilers, transmission
lines, pipe lines, distribution systems, service systems and supply
systems,
(2) nuclear fuel that has been expressly subjected to the lien of the
Mortgage,
(3) railroad cars, barges and other transportation equipment (other than
trucks) for the transportation of fuel, and
(4) other property, real or personal, and improvements, extensions,
additions, renewals or replacements located within the United States
of America or its coastal waters.
FPL may use any property of the type described in (1) through (4) above
as Property Additions whether or not that property is in operation and prior to
obtaining permits or licenses relating to that property. Securities, fuel
(including nuclear fuel unless expressly subjected to the lien of the Mortgage),
automobiles or other vehicles, or property used principally for the production
or gathering of natural gas will not qualify as Property Additions. The Mortgage
contains restrictions on the issuance of First Mortgage Bonds based on Property
Additions that are subject to other liens and upon the increase of the amount of
those liens.
In most cases, FPL may not issue Bonds unless it meets the "net
earnings" test set forth in the Mortgage, which requires, generally, that FPL's
adjusted net earnings (before income taxes) for 12 consecutive months out of the
15 months preceding the issuance must have been either:
(1) at least twice the annual interest requirements on all First Mortgage
Bonds at the time outstanding, including the Bonds that FPL proposes
to issue at the time, and all indebtedness of FPL that ranks prior or
equal to the First Mortgage Bonds, or
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(2) at least 10% of the principal amount of all First Mortgage Bonds at
the time outstanding, including the Bonds that FPL proposes to issue
at the time, and all indebtedness of FPL that ranks prior or equal to
the First Mortgage Bonds.
The Mortgage requires FPL to replace obsolete or worn out property and
specifies certain deductions to FPL's adjusted net earnings for property
repairs, retirement, additions and maintenance. With certain exceptions, FPL
does not need to meet the "net earnings" test to issue Bonds if the issuance is
based on retired First Mortgage Bonds or Qualified Lien Bonds.
As of March 31, 2004, FPL could have issued under the Mortgage in
excess of $4.5 billion of additional First Mortgage Bonds based on unfunded
Property Additions and in excess of $5.5 billion of additional First Mortgage
Bonds based on retired First Mortgage Bonds.
RELEASE AND SUBSTITUTION OF PROPERTY. FPL may release property from the
lien of the Mortgage if it does any of the following in an aggregate amount
equal to the fair value of the property to be released:
(1) deposits with the Trustee, cash or, to a limited extent, purchase
money mortgages,
(2) uses unfunded Property Additions acquired by FPL in the last five
years, or
(3) waives its right to issue First Mortgage Bonds
in each case without satisfying any net earnings requirement.
If FPL deposits cash so that it may release property from the lien of
the Mortgage or so that it may issue additional First Mortgage Bonds, it may
withdraw that cash if it uses unfunded Property Additions or waives its right to
issue First Mortgage Bonds without satisfying any net earnings requirement in an
amount equal to the cash that FPL seeks to withdraw.
When property released from the lien of the Mortgage is not Funded
Property, then, if FPL acquires new Property Additions within two years:
(1) Property Additions used for the release of that property will not
(subject to some exceptions) be considered Funded Property, and
(2) any waiver by FPL of its right to issue First Mortgage Bonds, which is
used for the release of that property, will cease to be an effective
waiver and FPL will regain the right to issue those First Mortgage
Bonds.
The Mortgage contains provisions relating to cash proceeds of property
that is not Funded Property that are similar to the provisions relating to
release of that property. The Mortgage contains special provisions relating to
pledged Qualified Lien Bonds and the disposition of money received on those
Qualified Lien Bonds.
FPL does not need a release from the Mortgage in order to use its
nuclear fuel even if that nuclear fuel has been expressly subjected to the lien
and operation of the Mortgage.
DIVIDEND RESTRICTIONS. In some cases, the Mortgage restricts the amount
of retained earnings that FPL can use to pay cash dividends on its common stock.
The restricted amount may change depending on factors set out in the Mortgage.
Other than this restriction on the payment of common stock dividends, the
Mortgage does not restrict FPL's use of retained earnings. As of March 31, 2004,
no retained earnings were restricted by these provisions of the Mortgage.
MODIFICATION OF THE MORTGAGE. Generally the rights of all of the
holders of First Mortgage Bonds may be modified with the consent of the holders
of 66-2/3% of the principal amount of all of the outstanding First Mortgage
Bonds. However, if less than all series of First Mortgage Bonds are affected by
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a modification, that modification also requires the consent of the holders of
66-2/3% of the principal amount of all of the outstanding First Mortgage Bonds
of each series affected.
FPL has reserved the right to amend the Mortgage without the consent of
the holders of any series of First Mortgage Bonds created after April 30, 1992
(including the Bonds) to permit modification of the Mortgage generally with the
consent of the holders of only a majority of the First Mortgage Bonds affected
by the modification. Since all of the First Mortgage Bonds issued on or prior to
April 30, 1992 have matured or have been redeemed and are no longer outstanding
under the Mortgage, FPL may exercise this right to amend the Mortgage at any
time.
In most cases, the following modifications will not be effective
against any holder of First Mortgage Bonds affected by the modification unless
that holder consents:
(1) modification of the terms of payment of principal and interest payable
to that holder,
(2) modification creating an equal or prior lien on the mortgaged property
or depriving that holder of the benefit of the lien of the Mortgage,
and
(3) modification reducing the percentage vote required for modification
(except as described above).
DEFAULT AND NOTICE THEREOF. The following are defaults under the
Mortgage:
(1) failure to pay the principal of any First Mortgage Bond,
(2) failure to pay interest on any First Mortgage Bond for 60 days after
that interest is due,
(3) failure to pay principal of or interest on any Qualified Lien Bond
beyond any applicable grace period for the payment of that principal
or interest,
(4) failure to pay any installments of funds for retirement of First
Mortgage Bonds for 60 days after that installment is due,
(5) certain events in bankruptcy, insolvency or reorganization, and
(6) the expiration of 90 days following notice by the Trustee or the
holders of 15% of the First Mortgage Bonds relating to other covenants
of FPL.
Except in the case of failure to pay principal, interest or any
installment for retirement of First Mortgage Bonds, the Trustee may withhold
notice of default if it believes that withholding the notice is in the interests
of the holders of First Mortgage Bonds.
Holders of 25% of the First Mortgage Bonds may declare the principal
and the interest due on default. A majority of the holders of First Mortgage
Bonds may annul that declaration if the default has been cured. No holder of
First Mortgage Bonds may enforce the lien of the Mortgage unless the following
things have occurred:
(1) the holder has given the Trustee written notice of a default,
(2) the holders of 25% of the First Mortgage Bonds have requested the
Trustee to act and offered it reasonable opportunity to act and
indemnity satisfactory to the Trustee for the costs, expenses and
liabilities that the Trustee may incur by acting, and
(3) the Trustee has failed to act.
Notwithstanding the foregoing, a holder of First Mortgage Bonds has the
right to sue FPL if FPL fails to pay, when due, interest or principal on those
First Mortgage Bonds, unless that holder gives up that right.
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The Trustee is not required to risk its funds or incur personal
liability if there is reasonable ground for believing that the repayment is not
reasonably assured. The holders of a majority of the First Mortgage Bonds may
direct the time, method, and place of conducting any proceedings for any remedy
available to the Trustee, or exercising any of the Trustee's powers.
SATISFACTION AND DISCHARGE OF MORTGAGE. The Mortgage may be satisfied
and discharged if and when FPL provides for the payment of all of the First
Mortgage Bonds and all other sums due under the Mortgage.
EVIDENCE TO BE FURNISHED TO THE TRUSTEE. FPL furnishes written
statements of FPL's officers, or persons selected or paid by FPL, annually (and
when certain events occur) to the Trustee to show that FPL is in compliance with
Mortgage provisions and that there are no defaults under the Mortgage. In some
cases, these written statements must be provided by an independent accountant,
appraiser, engineer or counsel.
DESCRIPTION OF PREFERRED STOCK
GENERAL. The following statements describing FPL's preferred stock are
not intended to be a complete description but rather are a summary of certain
preferences, privileges, restrictions and distinguishing characteristics
relating to the preferred stock currently authorized by FPL's Restated Articles
of Incorporation, as amended ("Charter"). For additional information, please see
FPL's Charter and its bylaws. Each of these documents has been previously filed
with the SEC and each is an exhibit to the registration statement filed with the
SEC of which this prospectus is a part. You should read this summary together
with the articles of amendment to FPL's Charter which will describe the terms of
any preferred stock offered hereby for a complete understanding of all the
provisions. Reference is also made to the laws of the State of Florida.
FPL's Charter authorizes four classes of preferred stock. Shares of two
of such classes are presently outstanding: 4 1/2% Preferred Stock Series A, $100
par value per share ("Series A Preferred Stock") and Preferred Stock, $100 par
value per share ("Serial Preferred Stock"). The preferred stock offered hereby
will be one or more new series of FPL's Serial Preferred Stock and/or one or
more new series of FPL's Preferred Stock, without par value ("No Par Preferred
Stock"). Currently, 50,000 shares of the Series A Preferred Stock and 200,000
shares of the Serial Preferred Stock are outstanding. The shares of the Serial
Preferred Stock outstanding are owned by FPL Group. Under the Charter,
10,414,000 shares of Serial Preferred Stock and 5,000,000 shares of No Par
Preferred Stock are available for issuance. FPL's Charter also authorizes the
issuance of 5,000,000 shares of Subordinated Preferred Stock, without par value
("Preference Stock"), none of which are currently outstanding. References in
this "Description of Preferred Stock" section of this prospectus to preferred
stock do not include the Preference Stock.
Some terms of a series of preferred stock may differ from those of
another series. A prospectus supplement will describe the terms of any preferred
stock being offered. These terms will also be described in articles of amendment
to FPL's Charter, which will establish the terms of the preferred stock being
offered. These terms will include any of the following that apply to that
series:
(1) the class of preferred stock, the number of shares in the series and
the title of that series of preferred stock,
(2) the annual rate or rates of dividends payable and the date from which
such dividends shall commence to accrue,
(3) the terms and conditions, including the redemption price and the date
or dates, on which the shares of the series of preferred stock may be
redeemed or converted into another class of security, the manner of
effecting such redemption and any restrictions on such redemptions,
(4) any sinking fund or other provisions that would obligate FPL to redeem
or repurchase shares of the series of preferred stock, and
(5) with respect to the No Par Preferred Stock only, variations with
respect to whole or fractional voting rights and involuntary
liquidation values.
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VOTING RIGHTS. FPL Group, as the owner of all of FPL's common stock,
has sole voting power, except as indicated below or as otherwise required by
law. The Charter does not limit the right of any affiliate of FPL to vote any
shares of preferred stock owned by it. Subject to any rights which might be
given to holders of Preference Stock, if any four full quarterly dividends on
any of the outstanding preferred stock are in default, the holders of the
outstanding preferred stock become entitled, as one class, to elect a majority
of the Board of Directors, which right does not terminate until full dividends
have been provided for all past periods. No dividends on FPL preferred stock are
currently in default. When entitled to vote, the holders of the preferred stock,
other than the No Par Preferred Stock, shall have one vote for each share held
and the holders of No Par Preferred Stock shall have one vote for every $100
liquidation value established for such shares, provided that amounts less than
$100 shall be afforded their proportional fractional vote.
So long as any shares of the Series A Preferred Stock or Serial
Preferred Stock are outstanding, FPL shall not, without the consent of at least
two-thirds of the total number of (a) shares of the Series A Preferred Stock
then outstanding and (b) each series of shares of the Serial Preferred Stock
then outstanding,
(1) create or authorize any new stock ranking prior to such preferred
stock as to dividends, or in liquidation, dissolution, winding up or
other distribution, or create or authorize any security convertible
into shares of such prior ranking stock, or
(2) amend, alter, change or repeal any of the express terms of such
preferred stock in a manner substantially prejudicial to the holders
thereof,
provided that if any such amendment affects less than all of the aforementioned
classes or series of preferred stock then only the consent of two-thirds of the
shares of each such class or series so affected is required.
So long as any shares of the No Par Preferred Stock are outstanding,
FPL shall not, without the consent of at least two-thirds of the total number of
votes attributable to the outstanding shares of the No Par Value Preferred Stock
and all other preferred stock ranking on a parity as to dividends or
distributions (including the Series A Preferred Stock and the Serial Preferred
Stock), voting together as one class,
(1) create or authorize any new stock ranking prior to the No Par
Preferred Stock as to dividends or in liquidation, dissolution,
winding up or other distribution or any security convertible into
shares of such prior ranking stock, or
(2) amend, alter or repeal any of the rights, preferences or powers of any
series of outstanding No Par Preferred Stock so as to alter materially
any such rights, preferences or power,
provided that with respect to (2) above,
(1) the preferred stock other than the No Par Preferred Stock shall be
entitled to vote as a member of such voting class only if the same
right, preference or power of such preferred stock other than the No
Par Preferred Stock are proposed to be materially amended, altered or
repealed in substantially the same manner, and
(2) if any amendment, alteration or repeal would alter materially the
rights, preferences or powers of less than all the series of the No
Par Preferred Stock or such other preferred stock, the consent of only
the holders of at least two-thirds of the total number of votes
attributable to the outstanding shares of all series so affected,
voting as a class, shall be required.
Without the consent of the holders of at least (i) a majority of the
outstanding shares of the Series A Preferred Stock, (ii) a majority of the
outstanding shares of each series of the Serial Preferred Stock and (iii) a
majority of the total number of votes attributable to the outstanding shares of
No Par Preferred Stock and all other preferred stock ranking on a parity with
the No Par Preferred Stock as to dividends or distributions, voting together as
a class, FPL shall not
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(1) merge or consolidate with or into any other corporation or sell or
otherwise dispose of all or substantially all of the assets of FPL,
unless the merger, consolidation or disposition or the exchange,
issuance or assumption of all securities to be issued or assumed in
connection with any such merger or consolidation or other disposition
shall have been approved, ordered or permitted by the appropriate
governmental regulatory bodies;
(2) issue, assume or incur, for purposes other than (a) the refunding of
outstanding unsecured indebtedness; (b) the reacquisition, redemption
or other retirement of any indebtedness issued or assumed by FPL; or
(c) the reacquisition, redemption or other retirement of all
outstanding shares of FPL's outstanding preferred stock and all
outstanding shares of any other class or series of stock ranking on a
parity with the outstanding preferred stock, any unsecured
indebtedness if, immediately thereafter, the total principal amount of
all unsecured indebtedness would exceed 20% of the secured
indebtedness issued or assumed by FPL plus the capital and surplus of
FPL;
(3) issue any shares of preferred stock, or of any other class of stock
ranking prior to or on parity with the outstanding preferred stock as
to dividends or distributions, unless
(a) FPL's net income (after depreciation and taxes) for a period of
twelve consecutive months within the fifteen months immediately
preceding the issuance of such shares is at least equal to twice
the annual dividend requirements on all outstanding shares of
preferred stock, the shares proposed to be issued, and on all
other prior or parity stock; and
(b) FPL's gross income (after depreciation and taxes) for the same
period shall have been at least 1.5 times the sum of annual
interest charges on all indebtedness and annual dividend
requirements on the outstanding preferred stock, the shares
proposed to be issued, and on all other prior or parity stock;
provided, that (i) interest charges on all indebtedness and dividends
of all shares of stock which are to be retired in connection with the
issuance of additional shares shall be excluded from such computation
and (ii) in the event additional shares are to be issued in connection
with the acquisition of new property, the gross income and the net
income of the acquired property may be included in such computation on
a pro forma basis, or
(4) issue any additional shares of the outstanding preferred stock or of
any prior or parity stock unless the aggregate of FPL's common stock
capital and surplus shall be not less than the aggregate amount
payable on the involuntary liquidation, dissolution or winding up of
FPL in respect of such preferred stock, and other prior or parity
stock, to be outstanding immediately thereafter.
LIQUIDATION RIGHTS. In the event of any voluntary liquidation,
dissolution or winding up of FPL, the Series A Preferred Stock, Serial Preferred
Stock and No Par Preferred Stock will rank pari passu with all classes of
preferred stock then outstanding and shall have a preference over each series of
the Preference Stock (none of which has been issued or is currently outstanding)
and the common stock until an amount equal to the then current redemption price
shall have been paid. In the event of any involuntary liquidation, dissolution
or winding up of FPL,
(1) the Series A Preferred Stock and the Serial Preferred Stock will rank
pari passu with all classes of preferred stock then outstanding and
shall also have a preference over each series of the Preference Stock
and the common stock until $100 per share shall have been paid, and
(2) the No Par Preferred Stock will rank pari passu with all classes of
FPL's preferred stock then outstanding and shall also have a
preference over each series of Preference Stock and the common stock
until the full involuntary liquidation value thereof, as established
upon issuance of the applicable series of No Par Preferred Stock,
shall have been paid,
in each case, plus all accumulated and unpaid dividends thereon, if any.
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CHANGES TO TERMS OF PREFERRED STOCK. In the event FPL redeems the
shares of Series A Preferred Stock and Serial Preferred Stock which are
currently outstanding, all of which shares are currently redeemable according to
their terms, FPL may amend the Charter to change many of the provisions
discussed above, including voting and liquidation rights, related to the
preferred stock. Such amendments could also be made with the consent of FPL
Group, as the holder of the outstanding Serial Preferred Stock, if FPL has
redeemed the shares of Series A Preferred Stock. In such an event, any changes
to the terms of the Serial Preferred Stock and the No Par Preferred Stock will
be described in a prospectus supplement relating to any preferred stock being
offered.
DESCRIPTION OF PREFERRED TRUST SECURITIES
GENERAL. The Trust may issue preferred trust securities and common
trust securities under the Trust Agreement. The terms of the agreements pursuant
to which the Preferred Trust Securities of the Trust will be issued are
substantially the same; each of these agreements is referred to in this
prospectus as the "Trust Agreement." These preferred trust securities and common
trust securities issued by the Trust 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 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, each 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.
In this section, any discussion of the Trust, Preferred Trust
Securities and Common Trust Securities relate only to the applicable Trust.
Holders of Preferred Trust Securities of the Trust will be entitled to any of
the benefits and protections contained in the Trust Agreement applicable to the
particular Trust which issued the relevant Trust Securities and not with respect
to any other Trust.
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--General"), the right
of FPL, 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. (Trust Agreement, Section
5.10).
FPL will fully and unconditionally guarantee payments due on the
Preferred Trust Securities issued by the Trust through a combination of the
following:
(1) FPL's obligations under the Junior Subordinated Debentures;
(2) the rights of holders of Preferred Trust Securities to enforce those
obligations;
(3) FPL's agreement to pay the expenses of the Trust; and
(4) FPL'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. 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 of the Preferred Trust Securities.
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The Trust will use the proceeds from the sale of the Trust Securities
to purchase Junior Subordinated Debentures from FPL. (Trust Agreement, Section
2.05). The Junior Subordinated Debentures will be issued under a Subordinated
Indenture between FPL and The Bank of New York, as trustee. The Junior
Subordinated Debentures will be held in trust for the benefit of holders of the
applicable 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 related
prospectus supplement. 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" below.
DISTRIBUTIONS. The only income of the Trust available for distribution
to the holders of Preferred Trust Securities will be payments on the applicable
Junior Subordinated Debentures. (Trust Agreement, Section 8.01). If FPL does not
make 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 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 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,
FPL may not:
(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
(4) make any payments with respect to any guarantee of debt securities if
such guarantee is equal or junior in right of payment to the Junior
Subordinated Debentures,
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) any payment, repayment, redemption, purchase, acquisition or
declaration of dividend described in clauses (1) and (2) above 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;
16
(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; or
(6) payments under any preferred trust securities guarantee or guarantee
of junior subordinated debentures executed and delivered by FPL
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.
Before an extension period ends, FPL 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 may select a new extended interest payment period. No interest
period may be extended beyond the maturity of the Junior Subordinated
Debentures.
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
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 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
17
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 the 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
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;
(3) the redemption of all of the Preferred Trust Securities of the Trust;
(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. (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, 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).
18
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 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).
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 and the Administrative Trustees notice of any
such default, unless that default shall 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 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
19
Debentures--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 of the Trust.
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
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 of Preferred Trust Securities without an opinion of counsel experienced
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, 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 its Administrative Trustees and FPL, 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
20
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 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:
(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 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 or any affiliate of FPL 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 another transfer agent and
registrar or rescind the designation of any transfer agent and registrar or
approve a change in the office through which any transfer agent and registrar
acts, except that FPL 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, Sections 2.07(a)
and 5.08).
The Trust will not be required to:
21
(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 and FPL. The paying agent may resign upon 30 days'
written notice to the Administrative Trustees, the Property Trustee and FPL. 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 reasonably acceptable to the Property Trustee and
FPL, 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)).
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 for United States federal income tax purposes.
In this regard, FPL 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 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).
22
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 will execute and deliver
for the benefit of the holders of the Preferred Trust Securities issued by the
Trust. The terms of these agreements are substantially the same, and they are
referred to in this prospectus as the "Preferred Trust Securities Guarantee
Agreement." 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 the 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 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):
(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's obligation
to make a guarantee payment may be satisfied by either making a direct payment
of the required amounts by FPL to the holders of Preferred Trust Securities or
23
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 FPL does not make interest payments on the Junior Subordinated
Debentures held by a Trust, the applicable Trust will not have funds available
to pay distributions on the Preferred Trust Securities.
FPL will fully and unconditionally guarantee payments due on the
Preferred Trust Securities issued by the Trust through a combination of the
following:
(1) FPL's obligations under Junior Subordinated Debentures;
(2) the rights of holders of Preferred Trust Securities to enforce those
obligations;
(3) FPL's agreement to pay the expenses of the Trust; and
(4) 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. 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 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.
SECURITY AND RANKING. The Preferred Trust Securities Guarantee will be
an unsecured obligation of FPL and will rank:
(1) subordinate and junior in right of payment to all other liabilities of
FPL (except those made pari passu or subordinate by their terms);
(2) equal in right of payment with the most senior preferred or preference
stock that may be issued by FPL and with any guarantee that may be
entered into by FPL in respect of any preferred or preference stock of
any affiliate of FPL; and
(3) senior to FPL common stock. (Preferred Trust Securities Guarantee
Agreement, Section 6.01).
The Preferred Trust Securities Guarantee Agreement does not limit the
amount of other indebtedness, including guarantees, that FPL may issue or incur
or the amount of preferred or preference stock it may issue.
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 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).
24
EVENTS OF DEFAULT. An event of default under the Preferred Trust
Securities Guarantee Agreement will occur upon failure of FPL 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). Upon an
event of default, 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
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 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 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 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).
25
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
GENERAL. The Junior Subordinated Debentures, which the Property Trustee
will hold on behalf of the Trust as trust assets, will be issued by FPL in one
or more series under an Indenture between FPL 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."
This section briefly summarizes some of the terms of the Junior
Subordinated Debentures and some of the provisions of the Subordinated
Indenture. This summary does not contain a complete description of the Junior
Subordinated Debentures. You should read this summary together with the
Subordinated Indenture and the officer's certificates or other documents
establishing the Junior Subordinated Debentures for a complete understanding of
all the provisions and for the definitions of some terms used in this summary.
The form of Subordinated Indenture, 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.
The Junior Subordinated Debentures issued by FPL 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 related Preferred Trust Securities and the
consideration paid by FPL for the related Common Trust Securities.
The Junior Subordinated Debentures will be unsecured, subordinated
obligations of FPL which rank junior to all of FPL's Senior Indebtedness (as
defined herein). All Junior Subordinated Debentures issued under the
Subordinated Indenture will rank equally and ratably with all other Junior
Subordinated Debentures issued under the Subordinated Indenture, except to the
extent that FPL elects to provide security with respect to any Junior
Subordinated Debenture without providing that security to all outstanding Junior
Subordinated Debentures as allowed under the Subordinated Indenture.
Each series of Junior Subordinated Debentures may have different terms.
FPL will include some or all of the following information about a specific
series of Junior Subordinated Debentures in the prospectus supplement 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 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 will pay interest and the
record date for any interest payable on any interest payment date,
26
(5) the person to whom FPL 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 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,
(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 may, at its option, redeem those Junior
Subordinated Debentures, 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 Junior Subordinated Debentures that would obligate FPL
to repurchase or redeem those Junior Subordinated Debentures,
(10) the denominations in which FPL 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 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 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 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 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 the Junior Subordinated
Debentures that FPL 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 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 the Junior Subordinated Debentures
denominated in a currency other than U.S. dollars, and any other
provisions for the reinstatement of FPL's indebtedness in respect of
those Junior Subordinated Debentures after their satisfaction and
discharge,
27
(19) if FPL 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 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,
(23) any collateral security, assurance, or guarantee for those Junior
Subordinated Debentures,
(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.
SUBORDINATION. The Junior Subordinated Debentures will be subordinate
and junior in right of payment to all Senior Indebtedness of FPL. (Subordinated
Indenture, Article Fourteen). 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 until all holders of Senior
Indebtedness of FPL 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;
(2) any Senior Indebtedness of FPL 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 are permitted to accelerate the
maturity of such Senior Indebtedness. (Subordinated Indenture, Section
1402).
Upon any distribution of assets of FPL 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 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 1402).
"Senior Indebtedness" means all of FPL's obligations, 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;
28
(3) all obligations of the types referred to in clauses (1) and (2) of
others which FPL 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.
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. 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).
PAYMENT AND PAYING AGENTS. Except as stated in the related prospectus
supplement, on each interest payment date FPL 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 will pay the interest to the person to whom it pays the
principal. Also, if FPL 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:
(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 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 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 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 may require payment of any tax or other
governmental charge in connection with any transfer or exchange of the Junior
Subordinated Debentures.
FPL will not be required to transfer or exchange any Junior
Subordinated Debenture selected for redemption. Also, FPL 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).
29
DEFEASANCE. FPL may, at any time, elect to have all of its obligations
discharged with respect to all or a portion of any Subordinated Indenture
Securities (including the Junior Subordinated Debentures). To do so, FPL 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
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 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 the 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, FPL may not:
(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
(4) make any payments with respect to any guarantee of debt securities if
such guarantee is equal or junior in right of payment to the Junior
Subordinated Debentures,
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) any payment, repayment, redemption, purchase, acquisition or
declaration of dividend described in clauses (1) and (2) above as a
result of a reclassification of its capital stock or the exchange or
30
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; or
(6) payments under any preferred trust securities guarantee or guarantee
of junior subordinated debentures executed and delivered by FPL
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. (Subordinated
Indenture, Section 608).
Any extension period with respect to any securities of FPL 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, 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 with terms substantially the same as those of
the Trust Agreement.
Before an extension period ends, FPL 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 may select a new extended interest payment period. No interest
period may be extended beyond the maturity of the Junior Subordinated
Debentures. FPL 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 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 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,
31
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 of the
related 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)).
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 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, FPL will not be required to redeem
such Junior Subordinated Debentures. (Subordinated Indenture, Section 404).
Subject to applicable law, including United States federal securities
law, FPL or its affiliates 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, FPL 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
is merged, or the entity that acquires or leases FPL'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's 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 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 would
be the surviving or resulting entity;
(2) any consolidation of FPL with any entity all of the outstanding voting
securities of which are owned, directly or indirectly, by FPL, 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;
32
(3) any conveyance or other transfer, or lease, of any part of the
properties or assets of FPL which does not constitute the entirety, or
substantially the entirety, thereof; or
(4) the approval by FPL of, or the consent by FPL to any consolidation or
merger to which any direct or indirect subsidiary or affiliate of FPL
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 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 receive written notice of such failure to comply from the
Subordinated Indenture Trustee, or FPL 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 and
(5) 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 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:
(1) FPL deposits with the Subordinated Indenture Trustee a sum sufficient
to pay:
(a) all overdue interest on all Subordinated Indenture Securities of
that series,
33
(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 of the
Subordinated Indenture Securities, 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).
FPL 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
34
Trustee's rights against FPL as a holder of the Junior Subordinated Debentures.
However, a holder of Preferred Trust Securities may enforce the Subordinated
Indenture directly against FPL 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 a majority 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 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 and the Subordinated 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 of
FPL's 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 or to surrender any right or power conferred
upon FPL 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
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
35
(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 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 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 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 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
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:
(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,
36
(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) 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,
(7) 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
(8) 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 (8) 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 or any other obligor upon the Subordinated Indenture Securities or any
affiliate of FPL or of that other obligor (unless FPL, 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).
If FPL solicits any action under the Subordinated Indenture from
registered owners of Subordinated Indenture Securities, FPL 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, FPL will not be
obligated to do this. If FPL 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 Subordinated Indenture Trustee or FPL 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).
37
RESIGNATION AND REMOVAL 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. 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 and FPL. 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 has delivered to the Subordinated Indenture Trustee resolutions of
its Board 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. The person in whose name a Subordinated Indenture Security is
registered may be treated 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).
INFORMATION CONCERNING THE TRUSTEES
In the regular course of business, FPL may obtain short-term funds from
several banks, including Deutsche Bank Trust Company Americas.
FPL and its affiliates, including FPL Group and FPL Group Capital Inc,
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 would act as
(i) Preferred Trust Securities Guarantee Trustee under the Preferred Trust
Securities Guarantee Agreement described under "Description of the Preferred
Trust Securities Guarantee" above and (ii) Property Trustee under the Trust
Agreement. The Bank of New York (Delaware) acts as the Delaware Trustee under
the Trust Agreement.
38
PLAN OF DISTRIBUTION
FPL 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 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 and/or the Trust uses a dealer in the sale, FPL 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 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 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 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 and/or the Trust may authorize underwriters, dealers or agents to
solicit offers by certain institutions to purchase the Offered Securities from
FPL 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.
The Offered Securities may also be offered and sold, if so indicated in
the applicable prospectus supplement, in connection with a remarketing upon
their purchase, in accordance with a redemption or repayment pursuant to their
terms, or otherwise, by one or more firms, which are referred to herein as the
"remarketing firms," acting as principals for their own accounts or as our agent
or the applicable trust's agents, as applicable. Any remarketing firm will be
identified and the terms of its agreement, if any, with FPL and/or the Trust and
its compensation will be described in the applicable prospectus supplement.
Remarketing firms may be deemed to be underwriters, as that term is defined in
the Securities Act of 1933, in connection with the securities remarketed
thereby.
FPL and/or the Trust may enter into derivative transactions with third
parties, or sell securities not covered by this prospectus to third parties in
privately negotiated transactions. If the applicable prospectus supplement
indicates, in connection with those derivatives, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement,
including in short sale transactions. If so, the third party may use securities
pledged by FPL and/or the Trust or borrowed from any of them or others to settle
39
those sales or to close out any related open borrowings of securities, and may
use securities received from FPL and/or the Trust in settlement of those
derivatives to close out any related open borrowings of securities. The third
party in such sale transactions will be an underwriter and, if not identified in
this prospectus, will be identified in the applicable prospectus supplement.
FPL 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'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 (which expresses an unqualified opinion and
includes an explanatory paragraph relating to FPL's changes in 2003 in its
methods of accounting for special purpose entities and for asset retirement
obligations), 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, will pass upon the legality of the
Offered Securities for FPL and the Trust. Hunton & Williams LLP, 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 Morris, James, Hitchens & Williams
LLP, special Delaware counsel to FPL and the Trust. 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 on the opinion of Morris, James, Hitchens &
Williams 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 Morris, James, Hitchens & Williams 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 NOR THE
TRUST HAS AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH ADDITIONAL OR DIFFERENT
INFORMATION. NEITHER FPL 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.
40
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FLORIDA POWER & LIGHT COMPANY
FIRST MORTGAGE BONDS,
$400,000,000 5.65% SERIES DUE FEBRUARY 1, 2037
[FPL LOGO]
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PROSPECTUS SUPPLEMENT
JANUARY 11, 2006
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Joint Book-Running Managers
BANC OF AMERICA SECURITIES LLC LEHMAN BROTHERS
Co-Managers
CALYON SECURITIES (USA)
LASALLE CAPITAL MARKETS
LAZARD CAPITAL MARKETS
RBS GREENWICH CAPITAL
SCOTIA CAPITAL
BBVA SECURITIES INC.
FORTIS SECURITIES LLC
HSBC
HVB CAPITAL MARKETS, INC.
SUNTRUST ROBINSON HUMPHREY
================================================================================