The information in this prospectus supplement and the accompanying prospectus is
not complete and may be changed. This prospectus supplement and the accompanying
prospectus are not offers to sell these securities and we are not soliciting
offers to buy these securities in any jurisdiction where the offer or sale is
not permitted.
PROSPECTUS SUPPLEMENT (Subject to Completion) Issued November 11, 2002
(To Prospectus dated July 3, 2002)
15,000,000 Shares
[LOGO] PSEG
Common Stock
----------
Public Service Enterprise Group Incorporated, or PSEG, is offering
15,000,000 shares of its common stock.
Our common stock is listed on the New York Stock Exchange, or NYSE, under
the symbol "PEG." On November 11, 2002, the last reported sale price of our
common stock on the NYSE was $27.34 per share.
----------
Investing in our common stock involves risks. See "Risk Factors" beginning
on page 5 of the accompanying prospectus.
----------
Underwriting Proceeds to
Price to Public Discount PSEG
--------------- ----------- ----------
Per Share .............. $ $ $
Total .................. $ $ $
We have granted the underwriters an option exercisable for up to 30 days
from the date of this prospectus supplement to purchase up to 2,250,000
additional shares at the price to the public less the underwriting discount to
cover overallotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The shares will be ready for delivery on or about November , 2002.
----------
Joint Book-Running Managers
JPMorgan Merrill Lynch & Co. Morgan Stanley
----------
Co-Lead Manager
Salomon Smith Barney
----------
Credit Suisse First Boston
The date of this prospectus supplement is November , 2002.
TABLE OF CONTENTS
Prospectus Supplement Page
----
About this Prospectus Supplement ....................................... S-3
Incorporation of Certain Documents by Reference ........................ S-3
Prospectus Supplement Summary .......................................... S-4
Use of Proceeds ........................................................ S-8
Price Range of Common Stock and Dividends .............................. S-8
Capitalization ......................................................... S-9
Certain Selected Financial Data ........................................ S-10
Underwriting ........................................................... S-11
Legal Matters .......................................................... S-13
Experts ................................................................ S-13
Prospectus
About this Prospectus .................................................. 3
Information About the Issuers .......................................... 3
Risk Factors ........................................................... 5
Forward-Looking Statements ............................................. 12
Use of Proceeds ........................................................ 13
Accounting Treatment Relating to Preferred Trust Securities ............ 13
Description of the Senior and Subordinated Debt Securities ............. 13
Description of the Trust Debt Securities ............................... 24
Description of the Preferred Trust Securities .......................... 29
Description of the Preferred Securities Guarantee ...................... 36
Relationship among the Preferred Trust Securities,
the Trust Debt Securities and the Preferred Securities Guarantee ..... 38
Description of the Capital Stock ....................................... 39
Description of the Stock Purchase Contracts and Stock Purchase Units ... 40
Plan of Distribution ................................................... 41
Legal Matters .......................................................... 42
Experts ................................................................ 42
Where You Can Find More Information .................................... 43
Incorporation of Certain Documents by Reference ........................ 43
----------
You should rely only on the information we have included or incorporated
by reference in this prospectus supplement and the accompanying prospectus. We
and the underwriters have not authorized anyone to provide you with additional
or different information. We are not making an offer of these securities in any
jurisdiction where the offer is not permitted. You should assume that the
information included in this prospectus supplement or the accompanying
prospectus is accurate only as of their respective dates and that any
information we have incorporated by reference in this prospectus supplement and
the accompanying prospectus is accurate only as of the date of the document in
which that information is included. Our business, financial condition, results
of operations and prospects may have changed since these dates.
S-2
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first is this prospectus supplement,
which describes the specific terms of this common stock offering and certain
other matters relating to us and the underwriters. The second part, the
accompanying prospectus, gives more general information about securities we may
offer from time to time, some of which information may not apply to the common
stock we are offering in this prospectus supplement.
If the description of the common stock varies between this prospectus
supplement and the accompanying prospectus, you should rely on the information
contained in or incorporated by reference into this prospectus supplement.
Unless we have indicated otherwise, or the context otherwise requires,
references in this prospectus supplement and the accompanying prospectus to
"PSEG," "we," "us" and "our" or similar terms are to Public Service Enterprise
Group Incorporated and its consolidated subsidiaries.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference or
deemed incorporated by reference is an important part of this prospectus
supplement, and information that we file later with the SEC will be deemed to
automatically update and supersede this incorporated information. We incorporate
by reference the documents in File No. 1-9120 listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934, as amended, prior to the termination of the
offering hereunder.
o Our Annual Report on Form 10-K for the year ended December 31, 2001;
o Our Quarterly Report on Form 10-Q/A for the quarter ended March 31,
2002;
o Our Quarterly Reports on Form 10-Q for the quarters ended June 30,
2002 and September 30, 2002;
o Our Current Reports on Form 8-K filed with the SEC on January 25,
2002, February 7, 2002, April 16, 2002, July 11, 2002, July 30,
2002, September 10, 2002 and October 11, 2002; and
o Our Current Report on Form 8-K/A filed with the SEC on July 29,
2002.
You can get a free copy of any of the documents incorporated by reference
by making an oral or written request directed to:
J. Brian Smith
Director, Investor Relations
PSEG Services Corporation
80 Park Plaza, 6th Floor
Newark, NJ 07101
Telephone (973) 430-6564
S-3
--------------------------------------------------------------------------------
PROSPECTUS SUPPLEMENT SUMMARY
You should read the following summary in conjunction with the more
detailed information contained in the accompanying prospectus and the documents
incorporated by reference. Unless otherwise indicated, the information in this
prospectus supplement and the accompanying prospectus assumes the underwriters
have not exercised their overallotment option.
Public Service Enterprise Group Incorporated
We are a leading integrated energy company engaged in power generation and
wholesale marketing and trading, as well as in the regulated delivery of power
and gas. Our domestic merchant power generation and wholesale marketing and
trading business, with more than 12,000 megawatts, or MW, of power generation
capacity, is one of the largest in the United States and the largest in the
Pennsylvania-New Jersey-Maryland Power Pool, or PJM, which is the primary power
market in which we participate. Our regulated power and gas distribution
business is also one of the largest in the United States and the largest in New
Jersey. We are also engaged in power generation and distribution in selected
international markets and have a substantial related business focused on
providing energy infrastructure financing in developed countries.
The following chart shows PSEG and its principal subsidiaries, Public
Service Electric and Gas Company (PSE&G), PSEG Power LLC (Power), PSEG Energy
Holdings LLC (Energy Holdings) and PSEG Services Corporation (Services), as well
as the principal operating subsidiaries of those subsidiaries:
PSEG
|
-----------------------------------------------------------
| | | |
PSE&G -- Power -- Energy Holdings Services
| |
|-- Fossil |-- Global
| |
|-- Nuclear |-- Resources
|
|-- ER&T
The major services and products we provide are offered through the
following subsidiaries:
o PSE&G is a regulated public utility supplying electric and gas
service to approximately 2.0 million electric customers and
approximately 1.6 million gas customers in New Jersey. PSE&G's
electric and gas service area is a corridor of approximately 2,600
square miles in which about 70% of the state's population resides.
This heavily populated, commercialized and industrialized service
area encompasses most of New Jersey's largest municipalities,
including its six largest cities. This service territory contains a
diversified mix of commerce and industry and its load requirements
are almost evenly split among residential, commercial and industrial
customers.
o Power is a multi-regional generating and wholesale energy trading
company that integrates its generating assets with its wholesale
energy trading, fuel supply and risk management operations. It
currently owns a portfolio of domestic power generation assets
which, as of September 30, 2002, had a total capacity of more than
12,000 MW. As a result of New Jersey's deregulation and
restructuring of its electric power industry, PSE&G's generation
business was transferred to Power in August 2000. Power operates
these assets on a competitive merchant basis. Power expects to
develop or acquire additional power generation assets
opportunistically. Power recently announced an agreement to purchase
1,019 MW of fossil generation assets and, additionally, is currently
constructing projects that are expected to increase its capacity by
approximately 2,950 MW through 2005, net of planned retirements.
--------------------------------------------------------------------------------
S-4
--------------------------------------------------------------------------------
o Global is a subsidiary of Energy Holdings that develops, owns and
operates power generation and distribution facilities in selected
areas of the worldwide energy market. Global has determined that it
will limit future spending to contractual commitments and refocus
its strategy from one of accelerated growth to one that places
emphasis on increasing the efficiency and returns of its assets. As
of September 30, 2002, Global had ownership interests in 32
operating power generation projects, totaling 5,279 MW (2,306 net MW
owned), and eight regulated distribution companies.
o Resources is a subsidiary of Energy Holdings that invests primarily
in energy-related financial transactions. Resources seeks to invest
in transactions where its expertise and understanding of the
inherent risks and operating characteristics of energy-related
assets provide a competitive advantage. As of September 30, 2002,
Resources had approximately $3.1 billion in investments.
Competitive Strengths
We believe that we are well positioned to enhance our position as one of
the leading integrated energy companies. Our significant competitive strengths
include the following:
Relatively stable regulated domestic energy delivery business with strong
cash flows
PSE&G's relatively stable cash flows allow us to fund our growth
initiatives largely from internally generated sources. The stability of PSE&G's
business is further enhanced by the relative affluence of its customer base; New
Jersey had the fourth-highest per capita personal income in the U.S. in 2000.
Unlike some other utilities that are exposed to daily fluctuations in the price
at which power can be procured for customers, PSE&G and the other New Jersey
utilities can secure all of their customers' longer-term power needs through a
centralized process in which a variety of power marketers bid to supply all of
New Jersey's power requirements over an annual or longer period. This auction
process was completed in February 2002 for the 12-month period from August 1,
2002 to July 31, 2003, and was widely viewed as an efficient, competitive
process for regulated power delivery companies, such as PSE&G, to procure a
longer-term source of power for their customers at constant prices.
One of the most competitive wholesale power generation asset portfolios in
the United States
We believe that Power's portfolio of wholesale power generation plants is
well-diversified in terms of fuel type, technology and energy market segments
served. We also believe that this diversity reduces the risk associated with
market demand cycles and allows us to participate in each segment of the
dispatch curve. Power's generation assets are also strategically located near
concentrations of customers.
Integrated generation and wholesale marketing and trading
As a complement to our portfolio of wholesale power generation assets, we
have an integrated wholesale energy marketing and trading operation with
significant technical capabilities and market expertise and a state-of-the-art
trading floor. This group, which has been in operation since 1997, centrally
controls all of Power's generation assets and provides a competitive wholesale
marketing, trading and risk management function that actively participates in
all aspects of the energy markets. The integration of our generation operations,
fossil fuel procurement and wholesale marketing, trading and risk management
capabilities enables us to optimize our mix of financial and physical assets and
mitigate the effects of adverse movements in the fuel and electricity markets.
Complementary mix of investments in the rapidly changing global energy
markets
In addition to our U.S.-based integrated energy business, we have
developed a portfolio of investments that provides us with near-term earnings
and supports our long-term growth. Resources' energy-related investments
generate cash flow and earnings in the near term, while Global's investments
generally have a longer time horizon prior to achieving expected cash flow and
earnings. In addition, Resources' passive and lower-risk investments balance the
higher risk associated with Global's operating investments.
--------------------------------------------------------------------------------
S-5
--------------------------------------------------------------------------------
Business Strategy
We pursue a complementary business mix comprised of regulated energy
distribution and unregulated power generation and wholesale energy marketing and
trading businesses. We believe our existing critical mass and expertise in both
regulated and unregulated businesses allows us to expand in both business
segments. As key elements of our strategy, we:
Enhance the operating performance of our regulated energy delivery
business
We continue to focus on improving the operating performance of our
regulated energy delivery business by reducing costs, while continuing to
provide safe, highly dependable service to our electric and gas customers. We
constantly seek new initiatives to reduce cost and improve performance, such as
our recent installation of a state-of-the-art substation in Newark, New Jersey
and our phasing in of a sophisticated outage management system. We are also
taking a leading role in the establishment of a research and development
consortium that will be focused on finding new ways to improve service.
Seek to minimize our exposure to long-term and short-term market risks
We actively manage the risks our businesses face through a risk management
framework we developed based on recommendations established by a group of
industry experts known as the Group of Thirty. These recommendations are
generally considered best practices for the use of derivative instruments. We
have a risk management committee that regularly reports to the PSEG board of
directors. On a daily basis, our energy marketing and trading operations reports
its risk exposure to our independent corporate risk management group, which, in
turn, reports to the chief financial officer of PSEG and to the corporate risk
management committee. The corporate risk management committee sets risk limits,
alert limits and portfolio loss limits for the business. These limits are
contained in the procedures and guidelines that detail the actions for
implementation of our corporate policy. The chief financial officer of PSEG
chairs the risk management committee, which formally meets quarterly to discuss
risk matters, but which is also convened on demand when more immediate risk
issues arise. The corporate risk management group is charged with measuring,
monitoring and reporting both market and credit risk. Our level of risk is
computed and reported weekly. We also mark all positions to market daily and
stress-test our portfolio on both a daily and a monthly basis to seek to
identify potential risks to our portfolio.
Opportunistically develop and acquire additional generation facilities in
our target markets
We operate the largest wholesale power generation and wholesale energy
marketing business in the PJM power market, which is one of the largest and most
efficient power markets in the United States. We pursue a disciplined,
opportunistic approach to asset growth through the development of new facilities
on existing sites and the acquisition of existing facilities in neighboring
regions where we can leverage our expertise with regard to operations, market
rules, trading and risk management. Any new development decisions will be based
upon a site's location with respect to load centers, priority position in the
transmission queue and access to existing fuel supplies.
----------
Please refer to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002, which is incorporated by reference in this prospectus
supplement, for discussions of current factors affecting our business including
credit rating developments and economic and industry considerations.
We are a New Jersey corporation with our principal offices located at 80
Park Plaza, Newark, New Jersey 07101. Our telephone number is (973) 430-7000.
--------------------------------------------------------------------------------
S-6
--------------------------------------------------------------------------------
The Offering
Common stock offered ............................... 15,000,000 shares
Common stock to be outstanding
after this offering .............................. 222,420,959 shares
Use of proceeds .................................... Repayment of outstanding
short-term indebtedness.
New York Stock Exchange symbol ..................... "PEG"
The number of shares of common stock offered and to be outstanding after
this offering do not include 2,250,000 shares of common stock that the
underwriters have an option to purchase from us within 30 days of the date of
this prospectus supplement to cover overallotments.
The number of shares of common stock to be outstanding after this offering
is based on 207,420,959 shares outstanding as of October 31, 2002.
--------------------------------------------------------------------------------
S-7
USE OF PROCEEDS
The net proceeds from the sale of the shares of common stock in this
offering are estimated to be approximately $ million (approximately $ million if
the underwriters' overallotment option is exercised in full) after deducting the
underwriting discount and estimated expenses payable by us.
We intend to use the proceeds from the sale of the shares of common stock
to repay short-term indebtedness. We had short-term indebtedness outstanding of
$1.7 billion as of September 30, 2002 with a weighted average annualized
interest rate of 2.53%.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock trades on the NYSE under the symbol "PEG." The following
table sets forth, on a per share basis, the high and low sales prices for our
common stock for the periods indicated as reported on the NYSE composite
transactions reporting system during the periods indicated.
High Low
------ ------
2002
Fourth Quarter (through November 11, 2002) ..... $31.52 $20.00
Third Quarter .................................. 43.50 28.00
Second Quarter ................................. 47.25 41.30
First Quarter .................................. 46.80 40.46
2001
Fourth Quarter ................................. 44.20 38.70
Third Quarter .................................. 50.00 40.21
Second Quarter ................................. 51.55 41.80
First Quarter .................................. 48.50 36.88
2000
Fourth Quarter ................................. 50.00 38.88
Third Quarter .................................. 45.69 32.88
Second Quarter ................................. 38.19 29.25
First Quarter .................................. 36.00 25.69
On November 11, 2002, the last reported sale price of our common stock on
the NYSE was $27.34 per share.
We declared quarterly dividends on our common stock at the rate of $0.54
per share for each quarter of 2000 and 2001 and for each of the first three
quarters of 2002.
S-8
CAPITALIZATION
The following table sets forth our capitalization as of September 30, 2002
(1) on an actual basis and (2) on an as adjusted basis to reflect the sale of
15,000,000 shares of our common stock and the application of the estimated net
proceeds as described under "Use of Proceeds." This table should be read in
conjunction with the detailed information and financial statements appearing in
documents incorporated by reference in this prospectus supplement and the
accompanying prospectus.
As of September 30, 2002
------------------------
Actual As Adjusted
------ -----------
(Millions of Dollars)
(Unaudited)
Commercial Paper and Loans ........................... $ 1,657 $
Long-Term Debt due within one year ................... 742 742
Long-Term Debt:
Long-term debt .................................... 6,902 6,902(1)
Securitization debt ............................... 2,259 2,259
Project level, non-recourse debt .................. 1,481 1,481
------- -------
Total long-term debt ............................ 10,642 10,642(1)
Subsidiaries' Preferred Securities:
Preferred stock without mandatory redemption ...... 80 80
Participating equity preference securities ........ 460 460
Guaranteed preferred beneficial
interest in subordinated debentures ............ 680 680
------- -------
Total subsidiaries' preferred securities ........ 1,220 1,220
------- -------
Common Stockholders' Equity:
Common stock (233,432,138 shares issued,
actual and 248,432,138 shares issued,
as adjusted) .................................... 3,590
Treasury stock, at cost (26,118,590 shares
actual and as adjusted) ......................... (981) (981)
Retained earnings ................................. 1,477 1,477
Accumulated other comprehensive loss .............. (414) (414)
------- -------
Total common stockholders' equity ............... 3,672
------- -------
Total Capitalization ................................. $17,933 $
======= =======
----------
(1) In October 2002, we closed on a $245 million private placement debt
transaction with a five-year average life, with the proceeds being used to
reduce short-term debt.
S-9
CERTAIN SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data for us and
our consolidated subsidiaries. Results as of September 30, 2002 and for the nine
months ended September 30, 2002 and 2001 are derived from our unaudited
consolidated financial statements and related notes, incorporated by reference
in this prospectus supplement and the accompanying prospectus, and in the
opinion of management, include all adjustments necessary for a fair presentation
of our financial position and results of operations as of and for those periods.
The financial data set forth below should be read in conjunction with our
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and consolidated financial statements, including the related notes,
in the documents incorporated by reference in this prospectus supplement and the
accompanying prospectus.
Nine Months Ended September 30,
-------------------------------
2002 2001
---- ----
(unaudited)
(Millions, except for
share data)
Operating Data: (A)
Total Operating Revenues ...................... $ 5,690 $ 5,317
Total Operating Expenses ...................... 4,747 3,883
-------- --------
Operating Income .............................. 943 1,434
-------- --------
Income before Discontinued Operations
and Cumulative Effects of Changes
in Accounting Principles ................... 161 584
Loss from Discontinued Operations (B) ......... (41) (17)
Cumulative Effect of a Change in
Accounting Principle (C) ................... (120) 9
-------- --------
Net Income .................................... $ -- $ 576
======== ========
Earnings per Share (Basic and Diluted):
Income before Discontinued Operations and
Cumulative Effects of Changes in
Accounting Principles ...................... $ 0.78 $ 2.80
Net Income .................................... $ -- $ 2.76
Weighted Average Common Shares
Outstanding (000's) ........................ 206,552 208,564
Dividends Paid per Common Share ............... $ 1.62 $ 1.62
As of
September 30, 2002
------------------
(unaudited)
Millions)
Balance Sheet Data: (A)
Total Assets .......................................... $ 25,954
========
Commercial Paper and Loans ............................ $ 1,657
Long-Term Debt due within one year .................... 742
Long-Term Debt
Long-Term Debt ..................................... 6,902
Securitization Debt ................................ 2,259
Project Level, Non-Recourse Debt ................... 1,481
--------
Total Long-Term Debt ............................. 10,642
Subsidiaries' Preferred Securities .................... 1,220
Common Stockholders' Equity ........................... 3,672
--------
Total Capitalization ............................. $ 17,933
========
----------
(A) In accordance with Emerging Issues Task Force (EITF) Issue No. 02-3 (EITF
02-3) in its June 2002 consensus, beginning in the third quarter of 2002,
we started reporting energy trading revenues and energy trading costs on a
net basis and have reclassified prior periods to conform with this net
presentation. As a result, both Operating Revenues and Operating Expenses
were reduced by approximately $1.5 billion and $1.7 billion for the nine
month periods ended September 30, 2002 and 2001, respectively. This change
in presentation did not have an effect on margins, net income or cash
flows. Corresponding reclassification of the financial data in our audited
consolidated financial statements for the three years ended December 31,
2001 incorporated herein by reference to conform with EITF 02-3 would
reduce Operating Revenues and Operating Expenses by $2.3 billion, $2.6
billion and $1.8 billion in 2001, 2000 and 1999, respectively. In
addition, presentation as discontinued operations of the results of Energy
Holdings' interests in Tanir Bavi at Global and its interests in its
HVAC/mechanical operating companies at Energy Technologies would reduce
Operating Revenues by $497 million, $322 million and $185 million and
Operating Expenses by $513 million, $340 million and $203 million and
would increase Operating Income by $16 million, $18 million and $18
million in 2001, 2000 and 1999, respectively.
(B) Includes an after tax loss on disposal of discontinued operations recorded
in 2002.
(C) Relates to the adoption of SFAS 142 "Goodwill and other Intangible Assets"
on January 1, 2002 and the adoption of SFAS 133 "Accounting for Derivative
Instruments and Hedging Activities" on January 1, 2001.
S-10
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus supplement, the underwriters named
below, for whom J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Morgan Stanley & Co. Incorporated are acting as
representatives, have severally agreed to purchase, and we have agreed to sell
to them, severally, the number of shares of common stock listed opposite their
names below.
Number of
Underwriter Shares
----------- ----------
J.P. Morgan Securities Inc. .....................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ...............................................
Morgan Stanley & Co. Incorporated ...............................
Salomon Smith Barney Inc. .......................................
Credit Suisse First Boston Corporation ..........................
----------
Total ....................................................... 15,000,000
==========
The underwriters have agreed to purchase all of the shares of common stock
sold under the underwriting agreement if any of these shares are purchased. If
an underwriter defaults, the underwriting agreement provides that the purchase
commitments of the nondefaulting underwriters may be increased or the
underwriting agreement may be terminated.
The underwriters are offering the shares of common stock, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
legal matters by their counsel, including the validity of the shares, and other
conditions contained in the underwriting agreement, such as the receipt by the
underwriters of officers' certificates and legal opinions. The underwriters
reserve the right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.
We have granted an option to the underwriters to purchase up to an
additional 2,250,000 shares at the public offering price less the underwriting
discount. The underwriters may exercise this option for 30 days from the date of
this prospectus supplement solely to cover any overallotments. If the
underwriters exercise this option, each will be obligated, subject to conditions
contained in the underwriting agreement, to purchase approximately the same
percentage of additional shares as the number set forth next to the
underwriter's name in the preceding table bears to the total number of shares
set forth next to the names of all underwriters in the preceding table. If the
underwriters' overallotment option is exercised in full, the total price to the
public would be approximately $ million, the total underwriting discount would
be approximately $ million and the total proceeds, before expenses, would be
approximately $ million.
The expenses of the offering, not including the underwriting discount, are
estimated to be $ and are payable by us.
The underwriters have advised us that they propose initially to offer the
shares of common stock to the public at the public offering price on the cover
page of this prospectus supplement and to dealers at that price less a
concession not in excess of $ per share. The underwriters may allow, and the
dealers may reallow, a discount not in excess of $ per share to other
dealers. After the public offering, the public offering price, concession and
discount may be changed.
We and our executive officers have each agreed that, subject to certain
exceptions, without the prior written consent of the representatives on behalf
of the underwriters, we will not, during the 90-day period after the date of
this prospectus supplement:
o offer, pledge, sell or contract to sell any shares of common stock
or any security convertible into or exchangeable or exercisable for
or repayable with shares of common stock,
o sell any option or contract to purchase any shares of common stock
or any security convertible into or exchangeable or exercisable for
or repayable with shares of common stock,
o purchase any option or contract to sell any shares of common stock
or any security convertible into or exchangeable or exercisable for
or repayable with shares of common stock,
S-11
o grant any option, right or warrant for the sale of any shares of
common stock or any security convertible into or exchangeable or
exercisable for or repayable with shares of common stock,
o lend or otherwise dispose of or transfer any shares of common stock
or any security convertible into or exchangeable or exercisable for
or repayable with shares of common stock, or
o enter into any swap or other agreement or any transaction that
transfers, in whole or in part, the economic equivalent of ownership
of shares of common stock or any security convertible or
exchangeable or exercisable for or repayable with shares of common
stock.
This agreement does not apply to issuances under our employee or director
compensation plans or our employee or other investment plans. The
representatives, in their sole discretion, may release any of the securities
subject to these lock-up agreements at any time without notice.
Our common stock is listed on the NYSE and trades under the symbol "PEG."
The shares offered hereby have been approved for listing on the NYSE, subject to
official notice of issuance.
Until the distribution of the shares offered hereby is completed, SEC
rules may limit the underwriters and selling group members from bidding for or
purchasing our common stock. However, the underwriters may engage in
transactions that stabilize the price of the common stock, such as bids or
purchases that peg, fix or maintain the price of the common stock.
In connection with the offering, the underwriters may make short sales of
our common stock. Short sales involve the sale by the underwriters, at the time
of the offering, of a greater number of shares of common stock than they are
required to purchase in the offering. Covered short sales are sales made in an
amount not greater than the overallotment option. The underwriters may close out
any covered short position by either exercising the overallotment option or
purchasing shares of common stock in the open market. In determining the source
of shares of common stock to close out the covered short position, the
underwriters will consider, among other things, the price of shares available
for purchase in the open market as compared to the price at which they may
purchase the shares through the overallotment option. Naked short sales are
sales in excess of the overallotment option. The underwriters must close out any
naked short position by purchasing shares of common stock in the open market. A
naked short position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of our common stock
in the open market after pricing that could adversely affect investors who
purchase in the offering. Similar to other purchase transactions, the purchases
by the underwriters to cover syndicate short positions may have the effect of
raising or maintaining the market price of our common stock or preventing or
retarding a decline in the market price of our common stock. As a result, the
price of our common stock may be higher than it would otherwise be in the
absence of these transactions.
Neither we nor any of the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
we nor any of the underwriters make any representation that the underwriters
will engage in these transactions or that these transactions, once commenced,
will not be discontinued without notice.
A preliminary prospectus supplement in electronic format may be made
available on the websites maintained by one or more of the underwriters
participating in this offering. The representatives may agree to allocate a
number of shares to underwriters for sale to their online brokerage account
holders. Internet distributions will be allocated by the underwriters that will
make internet distributions on the same basis as other allocations. Merrill
Lynch Direct will be facilitating distribution for this offering to certain of
its internet subscription customers. Merrill Lynch, Pierce, Fenner & Smith
Incorporated intends to allocate a limited number of shares for sale to its
online brokerage customers. An electronic preliminary prospectus supplement is
available on the internet website maintained by Merrill Lynch Direct.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933 or, if indemnification is
not allowed, to contribute to payments the underwriters may be required to make
because of those liabilities.
Certain of the underwriters and their affiliates have engaged and in the
future may engage in investment banking transactions and in general financing
and commercial banking transactions with, and the provision of services to, us
and our affiliates in the ordinary course of business. Certain of the
underwriters or their affiliates are lenders under certain of our revolving
credit facilities.
S-12
LEGAL MATTERS
Certain legal matters with respect to the offering of the securities will
be passed on for us by James T. Foran, Esq., our Associate General Counsel or R.
Edwin Selover, our Senior Vice President and General Counsel, and for the
underwriters by Sidley Austin Brown & Wood LLP. Sidley Austin Brown & Wood LLP
will rely upon the opinion of Mr. Foran or Mr. Selover as to all matters of New
Jersey law.
EXPERTS
The financial statements as of December 31, 2001 and 2000, and for each of
the three years in the period ended December 31, 2001 and the related financial
statement schedule, incorporated by reference in this prospectus supplement and
the accompanying prospectus from the Company's Annual Report on Form 10-K for
the year ended December 31, 2001, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference and have been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
S-13
PROSPECTUS
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PSEG FUNDING TRUST I
By this prospectus, we offer up to
$1,500,000,000
of
Public Service Enterprise Group Incorporated
Common Stock, Preferred Stock,
Stock Purchase Contracts, Stock Purchase Units and
Debt Securities
and
PSEG Funding Trust I
Preferred Trust Securities
Guaranteed as described in this prospectus by
Public Service Enterprise Group Incorporated
We will provide the specific terms of each series or issue of securities
in supplements to this prospectus. You should read this prospectus and the
applicable supplement carefully before you invest.
See "Risk Factors" beginning on page 5 for certain risks you should
consider.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is July 3, 2002.
TABLE OF CONTENTS
Page
----
About this Prospectus ................................................... 3
Information about the Issuers ........................................... 3
Risk Factors ............................................................ 5
Forward-Looking Statements .............................................. 12
Use of Proceeds ......................................................... 13
Accounting Treatment Relating to Preferred Trust Securities ............. 13
Description of the Senior and Subordinated Debt Securities .............. 13
Description of the Trust Debt Securities ................................ 24
Description of the Preferred Trust Securities ........................... 29
Description of the Preferred Securities Guarantee ....................... 36
Relationship among the Preferred Trust Securities, the Trust
Debt Securities and the Preferred Securities Guarantee ................ 38
Description of the Capital Stock 39
Description of the Stock Purchase Contracts and Stock Purchase Units .... 40
Plan of Distribution .................................................... 41
Legal Matters ........................................................... 42
Experts ................................................................. 42
Where You Can Find More Information ..................................... 43
Incorporation of Certain Documents by Reference ......................... 43
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we and PSEG
Funding Trust I filed with the SEC using a "shelf" registration process. Under
this shelf process, we and the Trust may, from time to time, sell the securities
described in this prospectus or combinations thereof in one or more offerings
with a maximum aggregate initial offering price of up to $1,500,000,000.
This prospectus provides a general description of the securities we may
offer. Each time we sell securities, we 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 "Where You Can
Find More Information."
In this prospectus, unless the context indicates otherwise, the words and
terms "PSEG," "the company," "we," "our," "ours" and "us" refer to Public
Service Enterprise Group Incorporated and its consolidated subsidiaries. "Trust"
refers to PSEG Funding Trust I.
We may use this prospectus to offer from time to time:
o shares of our common stock, without par value;
o shares of our preferred stock, without par value, which may be
convertible into our common stock;
o stock purchase contracts to purchase shares of our common stock;
o our unsecured debt securities, which may include senior,
subordinated and trust debt securities and which may be convertible
into our common stock. In this prospectus, we refer to the debt
securities, which may include senior debt securities, subordinated
debt securities and trust debt securities, as the "debt securities;"
o stock purchase units, consisting of a stock purchase contract and
our debt securities, the Trust's preferred securities or debt
obligations of third parties, including United States Treasury
securities, that are pledged to secure the stock purchase unit
holders' obligations under the stock purchase contracts.
The Trust may also use this prospectus to offer from time to time its
preferred securities, which we refer to in this prospectus as the "preferred
trust securities." We will execute a preferred securities guarantee covering the
preferred trust securities and will guarantee the Trust's obligations under the
preferred trust securities as described herein.
We sometimes refer to our common stock, preferred stock, stock purchase
contracts, stock purchase units, the debt securities, the preferred trust
securities and the preferred securities guarantee collectively as the
"securities."
For more detailed information about the securities, you should also review
the exhibits to the registration statement, which were either filed with the
registration statement or incorporated by reference to other SEC filings.
INFORMATION ABOUT THE ISSUERS
Public Service Enterprise Group Incorporated
We are an integrated energy and energy services company engaged in power
generation, regulated delivery of power and gas service and wholesale energy
marketing and trading. We are an exempt public utility holding company under the
Public Utility Holding Company Act of 1935 and neither own nor operate any
physical properties. Through our subsidiaries, we are one of the leading
providers of energy and energy-related services in the nation. We have four
direct, wholly-owned subsidiaries:
o Public Service Electric and Gas Company ("PSE&G"), which is an
operating public utility company engaged principally in the
transmission and distribution of electric energy and gas service in
New Jersey;
3
o PSEG Power LLC ("Power"), which is a multi-regional independent
electric generation and wholesale energy marketing and trading
company;
o PSEG Energy Holdings Inc. ("Energy Holdings"), which participates
nationally and internationally in energy-related lines of business
through its subsidiaries; and
o PSEG Services Corporation ("Services"), which provides
administrative and support services to us and our subsidiaries.
We are a New Jersey corporation with our principal offices located at 80
Park Plaza, Newark, New Jersey 07101. Our telephone number is (973) 430-7000.
Ratios of Earnings to Fixed Charges
Our ratios of earnings to fixed charges for each of the periods indicated
is as follows:
(unaudited) Years Ended December 31,
Quarter Ended --------------------------------
March 31, 2002 1997 1998 1999 2000 2001
-------------- ---- ---- ---- ---- ----
Ratios of Earnings to
Fixed Charges ........... 2.14 2.55 2.86 3.09 2.73 2.30
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose earnings consist of pre-tax income from
continuing operations excluding extraordinary items, plus the amount of fixed
charges adjusted to exclude: the amount of any interest capitalized during the
period; and the actual amount of any preferred stock dividend requirements of
majority-owned subsidiaries which were included in such fixed charges amount but
not deducted in the determination of pre-tax income. Fixed charges consist of:
interest, whether expensed or capitalized; amortization of debt discount,
premium and expense; an estimate of interest implicit in rentals; and preferred
securities dividend requirements of subsidiaries and preferred stock dividends,
increased to reflect our pre-tax earnings requirement.
Ratios of Earnings to Combined Fixed Charges and Preference Dividends
Our ratios of earnings to combined fixed charges and preference dividends
for each of the periods indicated is the same as our ratios of earnings to fixed
charges.
The Trust
The Trust is a statutory business trust created under the Delaware
Business Trust Act and operating under a trust agreement among us, Wachovia
Bank, National Association (formerly known as First Union National Bank), as the
property trustee, Wachovia Trust Company, National Association (formerly known
as First Union Trust Company, National Association), as Delaware trustee and one
of our employees, as administrative trustee. In this prospectus, we refer to
this agreement, as amended and restated, as the "trust agreement." The Trust
exists only to issue and sell its preferred trust securities and common trust
securities, to acquire and hold our trust debt securities as trust assets and to
engage in activities incidental to the foregoing. We will own all of the Trust's
outstanding common trust securities. The common trust securities will represent
at least 3% of the total capital of the Trust. Payments will be made on the
common trust securities pro rata with the preferred trust securities, except
that the right to payment on the common trust securities will be subordinated to
the rights of the preferred trust securities if there is a default under the
trust agreement resulting from an event of default under the trust debt
indenture.
The Trust's business and affairs will be conducted by its trustees and us,
as depositor, as set forth in the trust agreement. The office of the Delaware
trustee in the State of Delaware is One Rodney Square, 920 King Street, Suite
102, Wilmington, Delaware 19801. The Trust's offices are located at 80 Park
Plaza, Newark, NJ 07102 and its telephone number is (973) 430-7000.
4
RISK FACTORS
The following factors should be considered when reviewing our business and
are relied upon by us in issuing any forward-looking statements. These factors
could affect actual results and cause our results to differ materially from
those expressed in any forward-looking statements made by, or on behalf of us.
Some or all of these factors may apply to us and our subsidiaries.
Because A Portion Of Our Business Is Conducted Outside The United States,
Adverse International Developments Could Negatively Impact Our Business
A key component of our business strategy is the development, acquisition
and operation of projects outside the United States. The economic and political
conditions in certain countries where Global has interests, or in which Global
is or could be exploring development or acquisition opportunities, present risks
that may be different than those found in the United States including:
o delays in permitting and licensing;
o construction delays and interruption of business;
o risks of war;
o expropriation;
o nationalization;
o renegotiation or nullification of existing contracts; and
o changes in law or tax policy.
Changes in the legal environment in foreign countries in which Global may
develop or acquire projects could make it more difficult to obtain non-recourse
project refinancing on suitable terms and could impair Global's ability to
enforce its rights under agreements relating to such projects.
Operations in foreign countries also present risks associated with
currency exchange and convertibility, inflation and repatriation of earnings. In
some countries in which Global may develop or acquire projects in the future,
economic and monetary conditions and other factors could affect Global's ability
to convert its cash distributions to United States Dollars or other freely
convertible currencies, or to move funds offshore from these countries.
Furthermore, the central bank of any of these countries may have the authority
to suspend, restrict or otherwise impose conditions on foreign exchange
transactions or to approve distributions to foreign investors. Although Global
generally seeks to structure power purchase contracts and other project revenue
agreements to provide for payments to be made in, or indexed to, United States
Dollars or a currency freely convertible into United States Dollars, its ability
to do so in all cases may be limited.
Credit, Commodity And Financial Market Risks Could Negatively Impact Our
Business
The revenues generated by the operation of our generating stations are
subject to market risks that are beyond our control. Our generation output will
either be used to satisfy our wholesale contracts or be sold into the
competitive power markets or under other bilateral contracts. Participants in
the competitive power markets are not guaranteed any specified rate of return on
their capital investments through recovery of mandated rates payable by
purchasers of electricity.
A majority of our revenue is generated by the current BGS contract with
PSE&G, which expires on July 31, 2002 and is replaced with one-year contracts
with various direct bidders of the New Jersey BGS Auction, and from bilateral
contracts for the sale of electricity with third-party LSEs and power marketers.
Nonetheless, generation revenues and results of operations will be dependent
upon prevailing market prices for energy, capacity and ancillary services in the
markets we serve.
The following factors are among those that will influence the market
prices for energy, capacity and ancillary services:
o the extent of additional supplies of capacity, energy and ancillary
services from current competitors or new market entrants, including
the development of new generation facilities that may be able to
produce electricity less expensively;
5
o changes in the rules set by regulatory authorities with respect to
the manner in which electricity sales will be priced;
o transmission congestion and access in PJM and/or other competitive
markets;
o the operation of nuclear generation plants in PJM and other
competitive markets beyond their presently expected dates of
decommissioning;
o prevailing market prices for enriched uranium, fuel oil, coal and
natural gas and associated transportation costs;
o fluctuating weather conditions;
o reduced growth rate in electricity usage as a result of factors such
as national and regional economic conditions and the implementation
of conservation programs; and
o changes in regulations applicable to PJM and other Independent
System Operators (ISO).
As a result of the BGS auction, Power entered into contracts with the
direct suppliers of the New Jersey electric utilities, including PSE&G,
commencing August 1, 2002. These bilateral contracts are subject to credit risk.
This credit risk relates to the ability of counterparties to meet their payment
obligations for the power delivered under each BGS contract. Depending upon the
creditworthiness of the counterparty, this risk may be substantially higher than
the risk associated with potential nonpayment by PSE&G under the BGS contract
expiring July 31, 2002. Any failure to collect these payments under the new BGS
contracts with counterparties could have a material impact on our results of
operations, cash flows and financial position.
Energy Obligations, Available Supply And Trading Risks Could Negatively Impact
Our Business
Our energy trading and marketing business frequently involves the
establishment of energy trading positions in the wholesale energy markets on
long-term and short-term bases. To the extent that we have forward purchase
contracts to provide or purchase energy in excess of demand, a downturn in the
markets is likely to result in a loss from a decline in the value of our long
positions as we attempt to sell energy in a falling market. Conversely, to the
extent that we enter into forward sales contracts to deliver energy we do not
own, or take short positions in the energy markets, an upturn in the energy
markets is likely to expose us to losses as we attempt to cover our short
positions by acquiring energy in a rising market.
If the strategy we utilize to hedge our exposures to these various risks
is not effective, we could incur significant losses. Our substantial energy
trading positions can also be adversely affected by the level of volatility in
the energy markets that, in turn, depends on various factors, including weather
in various geographical areas and short-term supply and demand imbalances, which
cannot be predicted with any certainty.
Counterparty Credit Risks Or A Deterioration Of Power's Credit Quality May Have
An Adverse Impact On Our Business
We are exposed to the risk that counterparties will not perform their
obligations. Although we have devoted significant resources to develop our risk
management policies and procedures as well as counterparty credit requirements,
and will continue to do so in the future, we can give no assurance that losses
from our energy trading activities will not have a material adverse effect on
our business, prospects, results of operations, financial condition or net cash
flows.
In connection with its energy trading business, Power must meet credit
quality standards required by counterparties. Standard industry contracts
generally require trading counterparties to maintain investment grade ratings.
These same contracts provide reciprocal benefits to Power. If Power loses its
investment grade credit rating, ER&T would have to provide collateral in the
form of letters of credit or cash, which would significantly impact the energy
trading business. This would increase our costs of doing business and limit our
ability to successfully conduct our energy trading operations.
Substantial Change In The Electric Energy Industry Could Negatively Impact Our
Business
The electric energy industry in the State of New Jersey, across the
country and around the world is undergoing major transformations. As a result of
deregulation and the unbundling of energy supplies and services, the electric
energy markets are now open to competition from other suppliers in most markets.
6
Increased competition from these suppliers could have a negative impact on our
wholesale and retail sales. Among the factors that are common to the electric
industry that affect our business are:
o ability to obtain adequate and timely rate relief, cost recovery,
including unsecuritized stranded costs, and other necessary
regulatory approvals;
o deregulation, the unbundling of energy supplies and services and the
establishment of a competitive energy marketplace for products and
services;
o energy sales retention and growth;
o revenue stability and growth;
o nuclear operations and decommissioning;
o increased capital investments attributable to environmental
regulations;
o managing energy trading operations;
o ability to complete development or acquisition of current and future
investments;
o managing electric generation and distribution operations in
locations outside of traditional utility service territory;
o exposure to market price fluctuations and volatility;
o regulatory restrictions on affiliate transactions; and
o debt and equity market concerns.
Generation Operating Performance May Fall Below Projected Levels
Operation below expected capacity levels may result in lost revenues,
increased expenses and penalties. Individual facilities may be unable to meet
operating and financial obligations resulting in reduced cash flow.
The risks associated with operating power generation facilities, each of
which could result in performance below expected capacity levels, include:
o breakdown or failure of equipment or processes;
o disruptions in the transmission of electricity;
o labor disputes;
o fuel supply interruptions;
o limitations which may be imposed by environmental or other
regulatory requirements;
o permit limitations; and
o operator error or catastrophic events such as fires, earthquakes,
explosions, floods, acts of terrorism or other similar occurrences.
Our Ability to Service Our Debt Could Be Limited
We are a holding company with no material assets other than the stock of
our subsidiaries and project affiliates. Accordingly, all of our operations are
conducted by our subsidiaries and project affiliates which are separate and
distinct legal entities that have no obligation, contingent or otherwise, to pay
any amounts when due on our debt or to make any funds available to us to pay
such amounts. As a result, our debt will effectively be subordinated to all
existing and future debt, trade creditors, and other liabilities of our
subsidiaries and project affiliates and our rights and hence the rights of our
creditors to participate in any distribution of assets of any subsidiary or
project affiliate upon its liquidation or reorganization or otherwise would be
subject to the prior claims of that subsidiary's or project affiliate's
creditors, except to the extent that our claims as a creditor of such subsidiary
or project affiliate may be recognized.
We depend on our subsidiaries' and project affiliates' cash flow and our
access to capital in order to service our indebtedness. The project-related debt
agreements of subsidiaries and project affiliates generally restrict their
ability to pay dividends, make cash distributions or otherwise transfer funds to
us. These restrictions may include achieving and maintaining financial
performance or debt coverage ratios, absence of events of default, or priority
in payment of other current or prospective obligations.
7
Our subsidiaries have financed some investments using non-recourse project
level financing. Each non-recourse project financing is structured to be repaid
out of cash flows provided by the investment. In the event of a default under a
financing agreement which is not cured, the lenders would generally have rights
to the related assets. In the event of foreclosure after a default, our
subsidiary may lose its equity in the asset or may not be entitled to any cash
that the asset may generate. Although a default under a project financing
agreement will not cause a default with respect to our debt and that of our
subsidiaries, it may materially affect our ability to service our outstanding
indebtedness.
We can give no assurances that our current and future capital structure,
operating performance or financial condition will permit us to access the
capital markets or to obtain other financing at the times, in the amounts and on
the terms necessary or advisable for us to successfully carry out our business
strategy or to service our indebtedness.
If Our Operating Performance Falls Below Projected Levels, We May Not Be Able to
Service Our Debt
The risks associated with operating power generation facilities include
the breakdown or failure of equipment or processes, labor disputes and fuel
supply interruption, each of which could result in performance below expected
capacity levels. Operation below expected capacity levels may result in lost
revenues, increased expenses, higher maintenance costs and penalties, in which
case there may not be sufficient cash available to service project debt. In
addition, many of Global's generation projects rely on a single fuel supplier
and a single customer for the purchase of the facility's output under a long
term contract. While Global generally has liquidated damage provisions in its
contracts, the default by a supplier under a fuel contract or a customer under a
power purchase contract could adversely affect the facility's cash generation
and ability to service project debt.
Countries in which Global owns and operates electric and gas distribution
facilities may impose financial penalties if reliability performance standards
are not met. In addition, inefficient operation of the facilities may cause lost
revenue and higher maintenance expenses, in which case there may not be
sufficient cash available to service project debt.
Our Ability To Control Cash Flow From Our Minority Investments Is Limited
Our ability to control investments in which we own a minority interest is
limited. Assuming a minority ownership role presents additional risks, such as
not having a controlling interest over operations and material financial and
operating matters or the ability to operate the assets more efficiently. As
such, neither we nor Global are able to unilaterally cause dividends or
distributions to be made to us or Global from these operations.
Minority investments may involve risks not otherwise present for
investments made solely by us and our subsidiaries, including the possibility
that a partner, majority investor or co-venturer might become bankrupt, may have
different interests or goals, and may take action contrary to our instructions,
requests, policies or business objectives. Also, if no party has full control,
there could be an impasse on decisions. In addition, certain investments of
Resources are managed by unaffiliated entities which limits Resources' ability
to control the activities or performance of such investments and managers.
Failure to Obtain Adequate and Timely Rate Relief Could Negatively Impact Our
Business
As a public utility, PSE&G's rates are regulated by the BPU and the FERC.
These rates are designed to recover its operating expenses and allow it to earn
a fair return on its rate base, which primarily consists of its property, plant
and equipment less various adjustments. These rates include its electric and gas
tariff rates that are subject to regulation by the BPU as well as its
transmission rates that are subject to regulation by the FERC. PSE&G's base
rates are set by the BPU for electric distribution and gas distribution and are
effective until the time a new rate case is brought to the BPU. These base rate
cases generally take place every few years. Limited categories of costs are
recovered through adjustment charges that are periodically reset to reflect
actual costs. If these costs exceed the amount included in PSE&G's adjustment
charges, there will be a negative impact on cash flows.
If PSE&G's operating expenses, other than costs recovered through
adjustment charges, exceed the amount included in its base rates and in its FERC
jurisdictional rates, there will be a negative impact on our earnings or
operating cash flows.
Global's electric and gas distribution facilities are rate-regulated
enterprises. Governmental authorities establish rates charged to customers.
These rates are currently sufficient to cover all operating costs and provide
8
a return. However, in Argentina, we face considerable fiscal and cash
uncertainties including potential asset impairments, due to the current
economic, political and social crisis.
We can give no assurances that rates will, in the future, be sufficient to
cover Global's costs and provide a return on its investment. In addition, future
rates may not be adequate to provide cash flow to pay principal and interest on
the debt of Global's subsidiaries' and affiliates and to enable its subsidiaries
and affiliates to comply with the terms of debt agreements.
We May Not Have Access To Sufficient Capital In The Amounts And At The Times
Needed
Capital for our projects and investments has been provided by
internally-generated cash flow and borrowings by us and our subsidiaries. We
require continued access to debt capital from outside sources in order to
efficiently fund our capital needs and assure the success of our future projects
and acquisitions. Our ability to arrange financing on a non-recourse basis and
the costs of capital depend on numerous factors including, among other things,
general economic and market conditions, the availability of credit from banks
and other financial institutions, investor confidence, the success of current
projects and the quality of new projects.
We can give no assurances that our current and future capital structure or
financial condition will permit access to bank and debt capital markets. The
availability of capital is not assured since it is dependent upon our
performance and that of our other subsidiaries. As a result, there is no
assurance that we or our subsidiaries will be successful in obtaining financing
for our projects and acquisitions or funding the equity commitments required for
such projects and acquisitions in the future.
We And Our Subsidiaries Are Subject To Substantial Competition From Well
Capitalized Participants In The Worldwide Energy Markets
We and our subsidiaries are subject to substantial competition in the
United States and in international markets from:
o merchant generators;
o domestic and multi-national utility generators;
o fuel supply companies;
o engineering companies;
o equipment manufacturers;
o and affiliates of other industrial companies.
Restructuring of worldwide energy markets, including the privatization of
government-owned utilities and the sale of utility-owned assets, is creating
opportunities for, and substantial competition from, well-capitalized entities
which may adversely affect our ability to make investments on favorable terms
and achieve our growth objectives. Increased competition could contribute to a
reduction in prices offered for power and could result in lower returns which
may affect our ability to service our outstanding indebtedness, including
short-term debt.
Deregulation may continue to accelerate the current trend toward
consolidation among domestic utilities and could also result in the further
splitting of vertically-integrated utilities into separate generation,
transmission and distribution businesses. As a result, additional competitors
could become active in the merchant generation business. Resources faces
competition from numerous well-capitalized investment and finance company
affiliates of banks, utilities and industrial companies. Energy Technologies
faces substantial competition from utilities and their affiliates, and HVAC and
mechanical contractors.
Power Transmission Facilities May Impact Our Ability To Deliver Our Output To
Customers
Our ability to sell and deliver our electric energy products and grow our
business may be adversely impacted and our ability to generate revenues may be
limited if:
o transmission is disrupted,
o transmission capacity is inadequate, or
o a region's power transmission infrastructure is inadequate.
9
Regulatory Issues Significantly Impact Our Operations
Federal, state and local authorities impose substantial regulation and
permitting requirements on the electric power generation business. We are
required to comply with numerous laws and regulations and to obtain numerous
governmental permits in order to operate our generation stations.
We believe that we have obtained all material energy-related federal,
state and local approvals including those required by the Nuclear Regulatory
Commission (NRC), currently required to operate our generation stations.
Although not currently required, additional regulatory approvals may be required
in the future due to a change in laws and regulations or for other reasons. We
cannot assure that we will be able to obtain any required regulatory approval in
the future, or that we will be able to obtain any necessary extension in
receiving any required regulatory approvals. Any failure to obtain or comply
with any required regulatory approvals, could materially adversely affect our
ability to operate our generation stations or sell electricity to third parties.
We are subject to pervasive regulation by the NRC with respect to the
operation of our nuclear generation stations. This regulation involves testing,
evaluation and modification of all aspects of plant operation in light of NRC
safety and environmental requirements. The NRC also requires continuous
demonstrations that plant operations meet applicable requirements. The NRC has
the ultimate authority to determine whether any nuclear generation unit may
operate.
We can give no assurance that existing regulations will not be revised or
reinterpreted, that new laws and regulations will not be adopted or become
applicable to us or any of our generation stations or that future changes in
laws and regulations will not have a detrimental effect on our business.
Environmental Regulation May Limit Our Operations
We are required to comply with numerous statutes, regulations and
ordinances relating to the safety and health of employees and the public, the
protection of the environment and land use. These statutes, regulations and
ordinances are constantly changing. While we believe that we have obtained all
material environmental-related approvals currently required to own and operate
our facilities or that these approvals have been applied for and will be issued
in a timely manner, we may incur significant additional costs because of
compliance with these requirements. Failure to comply with environmental
statutes, regulations and ordinances could have a material effect on us,
including potential civil or criminal liability and the imposition of clean-up
liens or fines and expenditures of funds to bring our facilities into
compliance.
We can give no assurance that we will be able to:
o obtain all required environmental approvals that we do not yet have
or that may be required in the future;
o obtain any necessary modifications to existing environmental
approvals;
o maintain compliance with all applicable environmental laws,
regulations and approvals; or
o recover any resulting costs through future sales.
Delay in obtaining or failure to obtain and maintain in full force and
effect any environmental approvals, or delay or failure to satisfy any
applicable environmental regulatory requirements, could prevent construction of
new facilities, operation of our existing facilities or sale of energy from
these facilities or could result in significant additional cost to us.
We Are Subject To More Stringent Environmental Regulation Than Many Of Our
Competitors
Our facilities are subject to both federal and state pollution control
requirements. Most of our generating facilities are located in the State of New
Jersey. In particular, New Jersey's environmental programs are generally
considered to be more stringent in comparison to similar programs in other
states. As such, there may be instances where the facilities located in New
Jersey are subject to more stringent and therefore, more costly pollution
control requirements than competitive facilities in other states.
Insurance Coverage May Not Be Sufficient
We have insurance for our facilities, including:
o all-risk property damage insurance;
o commercial general public liability insurance;
10
o boiler and machinery coverage;
o nuclear liability; and
o for our nuclear generating units, replacement power and business
interruption insurance in amounts and with deductibles that we consider
appropriate.
We can give no assurance that this insurance coverage will be available in
the future on commercially reasonable terms nor that the insurance proceeds
received for any loss of or any damage to any of our facilities will be
sufficient to permit us to continue to make payments on our debt. Additionally,
some of our properties may not be insured in the event of an act of terrorism.
Acquisition, Construction And Development Activities May Not Be Successful
We may seek to acquire, develop and construct new energy projects, the
completion of any of which is subject to substantial risk. This activity
requires a significant lead time and requires us to expend significant sums for
preliminary engineering, permitting, fuel supply, resource exploration, legal
and other development expenses in preparation for competitive bids or before it
can be established whether a project is economically feasible.
The construction, expansion or refurbishment of a generation, transmission
or distribution facility may involve:
o equipment and material supply interruptions;
o labor disputes;
o unforeseen engineering environmental and geological problems; and
o unanticipated cost overruns.
The proceeds of any insurance, vendor warranties or performance guarantees may
not be adequate to cover lost revenues, increased expenses or payments of
liquidated damages. In addition, some power purchase contracts permit the
customer to terminate the related contract, retain security posted by the
developer as liquidated damages or change the payments to be made to the
subsidiary or the project affiliate in the event specified milestones, such as
commencing commercial operation of the project, are not met by specified dates.
If project start-up is delayed and the customer exercises these rights, the
project may be unable to fund principal and interest payments under its project
financing agreements. We can give no assurance that we will obtain access to the
substantial debt and equity capital required to develop and construct new
generation projects or to refinance existing projects to supply anticipated
future demand.
Changes In Technology May Make Our Power Generation Assets Less Competitive
A key element of our business plan is that generating power at central
power plants produces electricity at relatively low cost. There are other
technologies that produce electricity, most notably fuel cells, microturbines,
windmills and photovoltaic (solar) cells. While these methods are not currently
cost-effective, it is possible that advances in technology will reduce the cost
of alternative methods of producing electricity to a level that is competitive
with that of most central station electric production. If this were to happen,
our market share could be eroded and the value of our power plants could be
significantly impaired. Changes in technology could also alter the channels
through which retail electric customers buy electricity, which could affect our
financial results.
Recession, Acts Of War Or Terrorism Could Negatively Impact Our Business
The consequences of a prolonged recession and adverse market conditions
may include the continued uncertainty of energy prices and the capital and
commodity markets. We cannot predict the impact of any continued economic
slowdown or fluctuating energy prices; however, such impact could have a
material adverse effect on our financial condition, results of operations and
net cash flows.
Like other operators of major industrial facilities, our generation
plants, fuel storage facilities and transmission and distribution facilities may
be targets of terrorist activities that could result in disruption of our
ability to produce or distribute some portion of our energy products. Any such
disruption could result in a significant decrease in revenues and/or significant
additional costs to repair, which could have a material adverse impact on our
financial condition, results of operation and net cash flows.
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FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements, other
than statements of historical facts, included in this prospectus or in the
documents or information incorporated by reference or deemed to be incorporated
by reference in this prospectus that address activities, events or developments
that we expect or anticipate will or may occur in the future, including such
matters as our projections, future capital expenditures, business strategy,
competitive strengths, goals, expansion, market and industry developments and
the growth of our businesses and operations, are forward-looking statements.
These statements are based on assumptions and analyses made by us in light of
our experience and our perception of historical trends, current conditions and
expected future developments as well as other factors we believe are appropriate
under the circumstances. Forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
anticipated. These statements are based on management's beliefs as well as
assumptions made by and information currently available to management. When used
herein, the words "will," "anticipate," "intend," "estimate," "believe,"
"expect," "plan," "hypothetical," "potential," and variations of such words and
similar expressions are intended to identify forward-looking statements. The
following review of factors should not be construed as exhaustive or as any
admission regarding the adequacy of our disclosures prior to the effective date
of the Private Securities Litigation Reform Act of 1995. These risks and
uncertainties include:
o the significant considerations and risks discussed in any
incorporated document or prospectus supplement;
o general and local economic, market or business conditions;
o industrial, commercial and residential growth in the markets we
serve;
o since a portion of our business is conducted outside the United
States, adverse international developments;
o demand (or lack thereof) for electricity, capacity and ancillary
services in the markets served by our generation units;
o increasing competition from other companies;
o the acquisition and development opportunities (or lack thereof) that
may be presented to and pursued by us;
o terrorist threats and activities, particularly with respect to our
generation facilities, economic uncertainty caused by recent terror
attacks on the United States and potential adverse reactions to
United States anti-terrorism activities;
o nuclear decommissioning and the availability of storage facilities
for spent nuclear fuel;
o changes in laws or regulations that are applicable to us;
o environmental constraints on construction and operation;
o the rapidly changing market for energy products;
o licensing approval for our nuclear and other operating stations;
o the ability to economically and safely operate our generating
facilities in accordance with regulatory requirements;
o the ability to obtain adequate and timely rate relief in our
regulated businesses;
o the ability to maintain insurance for our operations and facilities
at reasonable rates;
o access to capital;
o credit, commodity and financial market risks; and
o other factors, such as weather conditions, many of which are beyond
our control.
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Consequently, all of the forward-looking statements made in this
prospectus are qualified by these cautionary statements and we cannot assure you
that the results or developments anticipated by us will be realized or, even if
realized, will have the expected consequences to or effects on us or our
business prospects, financial condition or results of operations. You should not
place undue reliance on these forward-looking statements in making your
investment decision. We expressly disclaim any obligation or undertaking to
release publicly any updates or revisions to these forward-looking statements to
reflect events or circumstances that occur or arise or are anticipated to occur
or arise after the date hereof. In making an investment decision regarding the
securities, we are not making, and you should not infer, any representation
about the likely existence of any particular future set of facts or
circumstances. The forward-looking statements contained in this prospectus, any
prospectus supplement and the documents incorporated by reference or deemed to
be incorporated by reference into this prospectus and any related prospectus
supplement are intended to qualify for the safe harbor provisions of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we
will use the net proceeds from the sale of the securities for general corporate
purposes, including repayment of outstanding debt. The Trust will use all of the
proceeds received from the sale of its preferred trust securities and common
trust securities to purchase our trust debt securities.
ACCOUNTING TREATMENT RELATING TO PREFERRED TRUST SECURITIES
The financial statements of the Trust will be consolidated with our
financial statements, with the preferred trust securities shown on our
consolidated financial statements as our guaranteed preferred beneficial
interest in trust debt securities. Our financial statements will include a
footnote that discloses, among other things, that the assets of the Trust
consist of our trust debt securities and will specify the designation, principal
amount, interest rate or formula and maturity date of the trust debt securities.
DESCRIPTION OF THE SENIOR AND SUBORDINATED DEBT SECURITIES
We may issue from time to time one or more series of the senior debt
securities under our Senior Indenture dated as of November 1, 1998 between us
and Wachovia Bank, National Association (formerly known as First Union National
Bank), as Senior Trustee, or one or more series of the subordinated debt
securities under our Subordinated Indenture to be entered into between us and
Wachovia Bank, National Association, as Subordinated Trustee. The term "Trustee"
refers to either the Senior Trustee or the Subordinated Trustee, as appropriate.
We will provide information about these debt securities in a prospectus
supplement.
The Senior Indenture and the form of Subordinated Indenture (sometimes
together referred as the "Indentures" and, individually, as an "Indenture") are
filed or incorporated by reference as exhibits to the registration statement of
which this prospectus is a part. The Indentures are subject to and governed by
the Trust Indenture Act of 1939. We have summarized the material terms and
provisions of the Indentures. Because this section is a summary, it does not
describe every aspect of the debt securities and the Indentures. We urge you to
read the Indenture that governs your debt securities for provisions that may be
important to you.
Provisions Applicable to Both the Senior and Subordinated Indentures
General
The debt securities will be our unsecured obligations. The senior debt
securities will rank equally with all other of our unsecured and unsubordinated
indebtedness. The subordinated debt securities will be subordinated in right of
payment to the prior payment in full of our senior indebtedness as described
below under "-- Subordinated Indenture Provisions." In this section, unless the
context requires, the words "we," "our," "ours" and "us" refer to Public Service
Enterprise Group Incorporated and not its consolidated subsidiaries.
13
Because we are a holding company and conduct all of our operations through
our subsidiaries, holders of our debt securities will generally have a junior
position to claims of creditors of those subsidiaries, including trade
creditors, debt holders, secured creditors, taxing authorities, guarantee
holders and any preferred stockholders other than, in each case, where we are
the creditor. As of March 31, 2002, PSE&G had 795,234 shares of its preferred
stock outstanding with an aggregate par value of approximately $80 million. Our
subsidiaries have ongoing corporate debt programs used to finance their business
activities. As of March 31, 2002, our subsidiaries had approximately $11.8
billion of debt outstanding.
Each Indenture provides that any debt securities proposed to be sold under
this prospectus and the accompanying prospectus supplement may be issued in an
unlimited amount under that Indenture in one or more series, in each case as
authorized by us from time to time.
You should read the relevant prospectus supplement for a description of
the material terms of any debt securities being offered, including:
o the title of the debt securities and whether the debt securities
will be senior debt securities or subordinated debt securities;
o the aggregate principal amount of the debt securities and any limit
on the aggregate principal amount of the debt securities of that
series;
o if less than the principal amount of the debt securities are payable
upon acceleration of the maturity of the debt securities, the
portion that will be payable or how this portion will be determined;
o the date or dates, or how the date or dates will be determined or
extended, on which the principal of the debt securities will be
payable;
o the rate or rates of interest, which may be fixed or variable, that
the debt securities will bear, if any, or how the rate or rates will
be determined;
o the terms of any remarketing of the debt securities;
o the date or dates from which interest, if any, on the debt
securities will accrue or how the date or dates will be determined;
o the interest payment dates, if any, and the record dates for any
interest payments or how the date or dates will be determined;
o the basis upon which interest will be calculated if other than that
of a 360-day year of twelve 30-day months;
o the right, if any, to extend interest payment periods and the
duration of any extension;
o any optional redemption provisions;
o any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the debt securities;
o whether the debt securities will be issued as registered securities,
bearer securities or both and any applicable restrictions;
o whether the debt securities will be issuable in temporary or
permanent global form and any applicable restrictions or
limitations;
o the place or places where the principal of and any premium and
interest on the debt securities will be payable and to whom and how
those payments will be made;
o whether the debt securities are convertible or exchangeable into any
other securities and, if so, the applicable terms and conditions;
o the denominations in which the debt securities will be issuable, if
other than $1,000 or any integral multiple thereof in the case of
registered securities and $5,000 in the case of bearer securities;
o the index, if any, with reference to which the amount of principal
of or any premium or interest on the debt securities will be
determined;
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o if other than the applicable Trustee, the identity of each security
registrar and/or paying agent;
o the applicability of the provisions of the applicable Indenture
described below under "-- Satisfaction and Discharge, Defeasance and
Covenant Defeasance" and any provisions in modification of, in
addition to or in lieu of any of these provisions;
o whether and under what circumstances we will pay additional amounts
in respect of any tax, assessment or governmental charge and, if so,
whether we will have the option to redeem the debt securities rather
than pay the additional amounts (and the terms of this option);
o any deletions, additions or changes in the events of default in the
applicable Indenture and any change in the right of the Trustee or
the holders to declare the principal amount of the debt securities
due and payable;
o any deletions, additions or changes in the covenants in the
applicable Indenture;
o the applicability of or any change in the subordination provisions
of the Indenture for a series of debt securities;
o any provisions granting special rights to holders of the debt
securities upon the occurrence of specified events; and
o any other material terms of the debt securities.
If applicable, the prospectus supplement will also set forth information
concerning any other securities offered thereby and a discussion of federal
income tax considerations relevant to the debt securities being offered.
For purposes of this prospectus, any reference to the payment of principal
of or premium or interest, if any, on the debt securities will include the
payment of any additional amounts required by the terms of the debt securities.
Debt securities may provide for less than the entire principal amount to
be payable upon acceleration of the maturity date ("original issue discount
securities"). Federal income tax and other matters concerning any original issue
discount securities will be discussed in the applicable prospectus supplement.
Neither Indenture limits the amount of debt securities that may be issued
in distinct series from time to time. Debt securities issued under an Indenture
are referred to, when a single Trustee is acting as trustee for all debt
securities issued under an Indenture, as the "indenture securities." Each
Indenture provides that there may be more than one Trustee thereunder, each with
respect to one or more different series of indenture securities. See "--
Resignation of Trustee" below. At a time when two or more Trustees are acting
under either Indenture, each with respect to only certain series, the term
indenture securities will mean the one or more series with respect to which each
respective Trustee is acting. In the event that there is more than one Trustee
under either Indenture, the powers and trust obligations of each Trustee as
described herein will extend only to the one or more series of indenture
securities for which it is Trustee. If two or more Trustees are acting under
either Indenture, then the indenture securities for which each Trustee is acting
would in effect be treated as if issued under separate indentures.
The general provisions of the Indentures do not contain any provisions
that would limit our ability to incur indebtedness or that would afford holders
of debt securities protection in the event of a highly leveraged or similar
transaction involving us. Please refer to the prospectus supplement for
information with respect to any deletions from, modifications of or additions to
the events of default or our covenants that are described below, including any
addition of a covenant or other provision providing event risk or similar
protection.
We have the ability to issue indenture securities with terms different
from those of indenture securities previously issued and, without the consent of
the holders thereof, to reopen a previous series of indenture securities and
issue additional indenture securities of that series, unless the reopening was
restricted when that series was created.
Denominations, Registration and Transfer
Debt securities of a series may be issuable solely as registered
securities, solely as bearer securities or as both registered securities and
bearer securities. The Indentures also provide that debt securities of a series
may be issuable in global form. See "-- Book-Entry Debt Securities." Unless
otherwise provided in the prospectus
15
supplement, debt securities denominated in U.S. dollars (other than global
securities, which may be of any denomination) are issuable in denominations of
$1,000 or any integral multiples of $1,000 (in the case of registered
securities) and in the denomination of $5,000 (in the case of bearer
securities). Unless otherwise indicated in the prospectus supplement, bearer
securities will have interest coupons attached.
Registered securities will be exchangeable for other registered securities
of the same series. If provided in the prospectus supplement, bearer securities
(with all unmatured coupons, except as provided below, and all matured coupons
which are in default) of any series may be similarly exchanged for registered
securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. If so provided, bearer securities
surrendered in exchange for registered securities between a regular record date
or a special record date and the relevant date for payment of interest will be
surrendered without the coupon relating to that date for payment of interest,
and interest will not be payable in respect of the registered security issued in
exchange for the bearer security, but will be payable only to the holder of the
coupon when due in accordance with the terms of the applicable Indenture. Unless
otherwise specified in the prospectus supplement, bearer securities will not be
issued in exchange for registered securities.
Registered securities of a series may be presented for registration of
transfer and debt securities of a series may be presented for exchange
o at each office or agency required to be maintained by us for payment
of that series as described in "-- Payment and Paying Agents" below,
and
o at each other office or agency that we may designate from time to
time for those purposes.
No service charge will be made for any transfer or exchange of debt
securities, but we may require payment of any tax or other governmental charge
payable in connection with the transfer or exchange.
We will not be required to
o issue, register the transfer of or exchange debt securities during a
period beginning at the opening of business 15 days before any
selection of debt securities of that series to be redeemed and
ending at the close of business on
- if debt securities of the series are issuable only as
registered securities, the day of mailing of the relevant
notice of redemption and
- if debt securities of the series are issuable as bearer
securities, the day of the first publication of the relevant
notice of redemption, or, if debt securities of the series are
also issuable as registered securities and there is no
publication, the day of mailing of the relevant notice of
redemption;
o register the transfer of or exchange any registered security, or
portion thereof, called for redemption, except the unredeemed
portion of any registered security being redeemed in part;
o exchange any bearer security called for redemption, except to
exchange the bearer security for a registered security of that
series and like tenor that is simultaneously surrendered for
redemption; or
o issue, register the transfer of or exchange any debt security which
has been surrendered for repayment at the option of the holder,
except the portion, if any, of that debt security not to be so
repaid.
Payment and Paying Agents
Unless otherwise provided in the prospectus supplement, premium, interest
and additional amounts, if any, on registered securities will be payable at any
office or agency to be maintained by us in Morristown, New Jersey and The City
of New York, except that at our option interest may be paid
o by check mailed to the address of the person entitled thereto
appearing in the security register or
o by wire transfer to an account maintained by the person entitled
thereto as specified in the security register.
Unless otherwise provided in the prospectus supplement, payment of any
installment of interest due on any interest payment date for registered
securities will be made to the person in whose name the registered security is
registered at the close of business on the regular record date for that
interest.
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If debt securities of a series are issuable solely as bearer securities or
as both registered securities and bearer securities, unless otherwise provided
in the prospectus supplement, we will be required to maintain an office or
agency
o outside the United States where, subject to any applicable laws and
regulations, the principal of and premium, and interest, if any, on
the series will be payable and
o in The City of New York for payments with respect to any registered
securities of that series (and for payments with respect to bearer
securities of that series in the limited circumstances described
below, but not otherwise);
provided that, if required in connection with any listing of debt securities on
the Luxembourg Stock Exchange or any other stock exchange located outside the
United States, we will maintain an office or agency for those debt securities in
any city located outside the United States required by the applicable stock
exchange. The initial locations of those offices and agencies will be specified
in the prospectus supplement. Unless otherwise provided in the prospectus
supplement, principal of and premium, if any and interest, if any, on bearer
securities may be paid by wire transfer to an account maintained by the person
entitled thereto with a bank located outside the United States. Unless otherwise
provided in the prospectus supplement, payment of installments of interest on
any bearer securities on or before maturity will be made only against surrender
of coupons for those interest installments as they mature. Unless otherwise
provided in the prospectus supplement, no payment with respect to any bearer
security will be made at any office or agency of ours in the United States or by
check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States. However, payments of
principal of and premium, if any and interest, if any, on bearer securities
payable in U.S. dollars will be made at the office of our paying agent in The
City of New York if payment of the full amount thereof in U.S. dollars at all
offices or agencies outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions.
We may from time to time designate additional offices or agencies, approve
a change in the location of any office or agency and, except as provided above,
rescind the designation of any office or agency.
Events of Default
The following will constitute events of default under each Indenture with
respect to any series of debt securities, unless we state otherwise in the
applicable prospectus supplement:
o we do not pay interest on a debt security of that series within 30
days of its due date;
o we do not pay principal of, or any premium on, a debt security of
the series on its due date;
o we do not deposit any sinking fund payment when due by the terms of
any debt security of that series;
o we remain in breach of a covenant in respect of the debt securities
of the series for 60 days after we receive a written notice of
default stating we are in breach. The notice must be sent by either
the Trustee or holders of at least 25% of the principal amount of
debt securities of the series;
o we file for bankruptcy or a court appoints a custodian or orders our
liquidation under any bankruptcy law or certain other events in
bankruptcy, insolvency or reorganization occur; and
o any other event of default provided with respect to debt securities
of that series occurs.
We are required to file with the applicable Trustee, annually, an
officer's certificate as to our compliance with all conditions and covenants
under the applicable Indenture. Each Indenture provides that the applicable
Trustee may withhold notice to the holders of debt securities of a series of any
default (except payment defaults on the debt securities of that series) if it
considers it in the interest of the holders of debt securities of such series to
do so.
If an event of default with respect to debt securities of a series has
occurred and is continuing, the applicable Trustee or the holders of not less
than 25% in principal amount of outstanding debt securities of that series may
declare the applicable principal amount of all of the debt securities of that
series to be due and payable immediately.
Subject to the provisions of the applicable Indenture relating to the
duties of the Trustee, in case an event of default with respect to debt
securities of a series has occurred and is continuing, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of the
17
holders of debt securities of that series, unless the holders have offered the
Trustee reasonable indemnity against the expenses and liabilities which might be
incurred by it in compliance with that request. Subject to such provisions for
the indemnification of the applicable Trustee, the holders of a majority in
principal amount of the outstanding debt securities of a series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to the debt securities of that series.
The holders of a majority in principal amount of the outstanding debt
securities of a series may, on behalf of the holders of all debt securities of
that series and any related coupons, waive any past default with respect to that
series and its consequences, except a default
o in the payment of the principal of, or premium, or interest, if any,
on any debt security of that series or any related coupons or
o relating to a covenant or provision that cannot be modified or
amended without the consent of the holder of each outstanding debt
security of that series affected by the modification or amendment.
Merger or Consolidation
Each Indenture provides that we may not consolidate with or merge with or
into any other corporation or convey or transfer our properties and assets as an
entirety or substantially as an entirety to any person, unless either we are the
continuing corporation or such corporation or person assumes by supplemental
indenture all of our obligations under such Indenture and the securities issued
thereunder and immediately after the transaction no default shall exist.
Modification or Waiver
Modification and amendment of an Indenture may be made by us and the
Trustee thereunder with the consent of the holders of a majority in principal
amount of all outstanding indenture securities issued thereunder that are
affected by the modification or amendment. The consent of the holder of each
outstanding indenture security affected is, however, required to:
o change the maturity of the principal of or any installment of
principal of or interest on that indenture security;
o reduce the principal amount of, or the rate or amount of interest in
respect of, or any premium payable upon the redemption of, that
indenture security, or change the manner of calculation thereof;
o change our obligation, if any, to pay additional amounts in respect
of that indenture security;
o reduce the portion of the principal of an original issue discount
security or indexed security that would be due and payable upon a
declaration of acceleration of the maturity date thereof or provable
in bankruptcy;
o adversely affect any right of repayment at the option of the holder
of that indenture security;
o change the place or currency of payment of principal, premium or
interest on that indenture security;
o impair the right to institute suit for the enforcement of any such
payment on or after the maturity date, redemption date or repayment
date;
o adversely affect any right to convert or exchange that indenture
security;
o reduce the percentage in principal amount of that outstanding
indenture securities required to amend or waive compliance with
certain provisions of the applicable Indenture or to waive certain
defaults;
o reduce the requirements for voting or quorum described below; or
o modify any of the foregoing requirements or any of the provisions
relating to waiving past defaults or compliance with certain
restrictive provisions, except to increase the percentage of holders
required to effect any such waiver or to provide that certain other
provisions of the Indenture cannot be modified or waived without the
consent of the holders of each indenture security affected thereby.
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In addition, under the Subordinated Indenture, no modification or
amendment thereof may, without the consent of the holder of each outstanding
subordinated security affected thereby, modify any of the provisions of that
Indenture relating to the subordination of the subordinated securities in a
manner adverse to the holders and no such modification or amendment may
adversely affect the rights of any holder of senior indebtedness described under
the caption "-- Subordinated Indenture Provisions" without the consent of that
holder of senior indebtedness.
The holders of a majority in aggregate principal amount of outstanding
indenture securities have the right to waive our compliance with certain
covenants in the applicable Indenture.
Modification and amendment of an Indenture may be made by the applicable
Trustee and us, without the consent of any holder, for any of the following
purposes:
o to evidence the succession of another person to us as obligor under
such Indenture;
o to add to our covenants for the benefit of the holders of all or any
series of indenture securities issued under the Indenture or to
surrender any right or power conferred upon us by the Indenture;
o to add events of default for the benefit of the holders of all or
any series of indenture securities;
o to add to or change any provisions of the Indenture to facilitate
the issuance of, or to liberalize the terms of, bearer securities,
or to permit or facilitate the issuance of indenture securities in
uncertificated form, provided that any such actions do not adversely
affect the holders of the indenture securities or any related
coupons;
o to change or eliminate any provisions of the Indenture, as long as
that change or elimination will become effective only when there are
no indenture securities outstanding entitled to the benefit of those
provisions;
o to secure the indenture securities under the applicable Indenture
pursuant to any requirements of the Indenture, or otherwise;
o to establish the form or terms of indenture securities of any series
and any related coupons;
o to provide for the acceptance of appointment by a successor Trustee
or facilitate the administration of the trusts under the Indenture
by more than one Trustee;
o to cure any ambiguity, defect or inconsistency in the Indenture,
provided that action does not adversely affect the interests of
holders of indenture securities of a series issued thereunder or any
related coupons in any material respect; or
o to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any
series of indenture securities thereunder, provided that the action
does not adversely affect the interests of the holders of any
indenture securities and any related coupons in any material
respect.
In determining whether the holders of the requisite principal amount of
outstanding indenture securities have given any request, demand, authorization,
direction, notice, consent or waiver under the applicable Indenture or whether a
quorum is present at a meeting of holders of indenture securities thereunder,
o the principal amount of an original issue discount security that
will be deemed to be outstanding will be the amount of the principal
thereof that would be due and payable as of the date of such
determination upon acceleration of the maturity thereof,
o the principal amount of an indexed security that may be counted in
making such determination will be equal to the principal face amount
of the indexed security at original issuance, unless otherwise
provided with respect to the indexed security pursuant to the
Indenture and
o indenture securities owned by us or any other obligor upon the
indenture securities or any affiliate of ours or of any other
obligor shall be disregarded.
Each Indenture contains provisions for convening meetings of the holders
of indenture securities of a series if indenture securities of that series are
issuable as bearer securities. A meeting may be called at any time by the
applicable Trustee, and also, upon request, by us or the holders of at least 10%
in principal amount of the
19
outstanding indenture securities of that series, in any such case upon notice
given as provided in the applicable Indenture. Except for any consent that must
be given by the holder of each indenture security affected thereby, as described
above, any resolution presented at a meeting at which a quorum is present may be
adopted by the affirmative vote of the holders of a majority in principal amount
of the outstanding indenture securities of that series; except that any
resolution with respect to any action that may be made, given or taken by the
holders of a specified percentage which is less than a majority in principal
amount of the outstanding indenture securities of a series may be adopted at a
meeting at which a quorum is present by the affirmative vote of the holders of
that specified percentage in principal amount of the outstanding indenture
securities of that series. Any resolution passed or decision taken at any
meeting of holders of indenture securities of a series held in accordance with
the applicable Indenture will be binding on all holders of indenture securities
of that series and any related coupons. The quorum at any meeting called to
adopt a resolution will be persons holding or representing a majority in
principal amount of the outstanding indenture securities of a series; except
that, if any action is to be taken at the meeting with respect to a consent or
waiver which may be given by the holders of not less than a specified percentage
in principal amount of the outstanding indenture securities of a series, the
persons holding or representing that specified percentage in principal amount of
the outstanding indenture securities of that series will constitute a quorum.
Satisfaction and Discharge, Full Defeasance and Covenant Defeasance
We may discharge certain of our obligations to holders of debt securities
of a series that have not already been delivered to the applicable Trustee for
cancellation and that either have become due and payable or are due and payable
within one year (or scheduled for redemption within one year) by irrevocably
depositing with the applicable Trustee, in trust, funds in an amount sufficient
to make interest, principal and any other payments on the debt securities on
their various due dates.
Each Indenture provides that, if the series of the debt securities
provides for it, we may elect either to defease and be discharged from any and
all obligations with respect to the debt securities and any related coupons,
with certain limited exceptions (this is called "full defeasance") or to be
released from our obligations under any specified covenant with respect to those
debt securities and any related coupons, and any omission to comply with those
obligations shall not constitute a default or an event of default with respect
to those debt securities and any related coupons (this is called "covenant
defeasance").
In order to effect full defeasance or covenant defeasance, we must deposit
for the benefit of all holders of the debt securities of the particular series a
combination of cash and/or U.S. government securities or U.S. government agency
notes or bonds that will generate enough cash to make interest, principal and
other payments on the debt securities on their various due dates.
A trust may only be established if, among other things, we have delivered
to the applicable Trustee a legal opinion stating that the holders of the debt
securities and any related coupons will not recognize income, gain or loss for
United States federal income tax purposes as a result of the defeasance or
covenant defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if the defeasance or covenant defeasance had not occurred, and the
legal opinion, in the case of full defeasance must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of the Indenture.
In the event we effect covenant defeasance with respect to any debt
securities and any related coupons and those debt securities and coupons are
declared due and payable because of the occurrence of certain events of default
with respect to any covenant as to which there has been covenant defeasance, the
amount of funds on deposit with the applicable Trustee will be sufficient to pay
amounts due on those debt securities and coupons at the time of their stated
maturity date but may not be sufficient to pay amounts due on those debt
securities and coupons at the time of the acceleration resulting from the event
of default. In such case, we would remain liable to make payment of those
amounts due at the time of acceleration.
If the applicable Trustee or any paying agent is unable to apply any money
in accordance with the applicable Indenture by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then our obligations under the Indenture and the
debt securities and any related coupons will be revived and reinstated as though
no deposit had occurred pursuant to the Indenture, until the Trustee or paying
agent is permitted to apply all such money in accordance with such Indenture.
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The prospectus supplement may further describe the provisions, if any,
permitting full defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the debt securities of or
within a particular series and any related coupons.
Book-Entry Debt Securities
Debt securities of a series may be issued, in whole or in part, in global
form that will be deposited with, or on behalf of, a depositary identified in
the prospectus supplement. Global securities may be issued in either registered
or bearer form and in either temporary or permanent form (a "global security").
Unless otherwise provided in the prospectus supplement, debt securities that are
represented by a global security will be issued in denominations of $1,000 and
any integral multiple thereof, and will be issued in registered form only,
without coupons. Payments of principal of (and premium, if any) and interest, if
any, on debt securities represented by a global security will be made by us to
the applicable Trustee and then by such Trustee to the depositary.
We anticipate that any global securities will be deposited with, or on
behalf of, The Depository Trust Company ("DTC"), New York, New York, that global
securities will be registered in the name of DTC's nominee, and that the
following provisions will apply to the depositary arrangements with respect to
any global securities. Additional or differing terms of the depositary
arrangements will be described in the prospectus supplement.
So long as DTC or its nominee is the registered owner of a global
security, DTC or its nominee, as the case may be, will be considered the sole
holder of the debt securities represented by such global security for all
purposes under the applicable Indenture. Except as provided below, owners of
beneficial interests in a global security will not be entitled to have debt
securities represented by the global security registered in their names, will
not receive or be entitled to receive physical delivery of debt securities in
certificated form and will not be considered the owners or holders thereof under
the applicable Indenture. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form; those laws may limit the transferability of beneficial
interests in a Global Security.
If
o DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by us within
90 days following notice to us;
o we determine, in our sole discretion, not to have any debt
securities represented by one or more global securities; or
o an event of default under the applicable Indenture has occurred and
is continuing, then we will issue individual debt securities in
certificated form in exchange for the relevant global securities.
In any such instance, an owner of a beneficial interest in a global
security will be entitled to physical delivery of individual debt securities in
certificated form of like tenor and rank, equal in principal amount to such
beneficial interest and to have such debt securities in certificated form
registered in its name. Unless otherwise provided in the prospectus supplement,
debt securities so issued in certificated form will be issued in denominations
of $1,000 or any integral multiple thereof and will be issued in registered form
only, without coupons.
The following is based on information furnished by DTC and applies to the
extent that it is the depositary, unless otherwise provided in the prospectus
supplement:
Registered Owner. The debt securities will be issued as fully registered
securities in the name of Cede & Co., which is DTC's partnership nominee. The
applicable Trustee will deposit the global securities with the depositary. The
deposit with the depositary and its registration in the name of Cede & Co. will
not change the nature of the actual purchaser's ownership interest in the debt
securities.
DTC's Organization. DTC is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of that
law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934.
DTC is owned by a number of its direct participants and the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and some other
organizations that
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directly participate in DTC. Other entities may access DTC's system by clearing
transactions through or maintaining a custodial relationship with direct
participants. The rules applicable to DTC and its participants are on file with
the SEC.
DTC's Activities. DTC holds securities that its participants deposit with
it. DTC also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts. Doing so
eliminates the need for physical movement of securities certificates.
Participant's Records. Except as otherwise provided in this prospectus or
a prospectus supplement, purchases of debt securities must be made by or through
a direct participant, which will receive a credit for the debt securities on the
depositary's records. The purchaser's interest is in turn to be recorded on the
participant's records. Actual purchasers will not receive written confirmation
from the depositary of their purchase, but they generally receive confirmations,
along with periodic statements of their holdings, from the participants through
which they entered into the transaction.
Transfers of interests in the global securities will be made on the books
of the participants on behalf of the actual purchasers. Certificates
representing the interest in debt securities will not be issued unless the use
of global securities is suspended.
The depositary has no knowledge of the actual purchasers of global
securities. The depositary's records only reflect the identity of the direct
participants, who are responsible for keeping account of their holdings on
behalf of their customers.
Notices among the Depositary, Participants and Actual Purchasers. Notices
and other communications by the depositary, its participants and the actual
purchasers will be governed by arrangements among them, subject to any legal
requirements in effect. Any redemption notices will be sent to DTC. If less than
all of the securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each direct participant in such
issue to be redeemed.
Voting Procedures. Neither DTC nor Cede & Co. will give consents for or
vote the global securities. The depositary generally mails an omnibus proxy to
us just after the applicable record date. That proxy assigns Cede & Co.'s voting
rights to the direct participants to whose accounts the debt securities are
credited at that time.
Payments. Principal and interest payments made by us will be delivered to
the depositary. DTC's practice is to credit direct participants' accounts on the
applicable payment date unless it has reason to believe that it will not receive
payment on that date. Payments by participants to actual purchasers will be
governed by standing instructions and customary practices, as is the case with
securities held for customers in bearer form or registered in "street name."
Those payments will be the responsibility of that participant and not the
depositary, the applicable Trustee or us, subject to any legal requirements in
effect at that time.
We are responsible for payment of principal, interest and premium, if any,
to the applicable Trustee who is responsible for paying it to the depositary.
The depositary is responsible for disbursing those payments to direct
participants. The participants are responsible for disbursing payments to the
actual purchasers.
DTC may discontinue providing its services as securities depositary with
respect to the debt securities at any time by giving reasonable notice to the
applicable paying agent or us. Under such circumstances, in the event that a
successor securities depositary is not appointed, debt security certificates are
required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). In that event, debt security
certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that we believe to be reliable,
but we take no responsibility for the accuracy thereof.
Unless stated otherwise in the prospectus supplement, the underwriters or
agents with respect to a series of debt securities issued as global securities
will be direct participants in DTC.
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None of any underwriter or agent, the Trustees, any applicable paying
agent or us will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in a
global security, or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
Resignation of Trustee
The Trustee may resign or be removed with respect to one or more series of
indenture securities and a successor Trustee may be appointed to act with
respect to the series. In the event that two or more persons are acting as
Trustee with respect to different series of indenture securities under one of
the Indentures, each such Trustee shall be a Trustee of a trust thereunder
separate and apart from the trust administered by any other Trustee, and any
action described herein to be taken by the Trustee may then be taken by each
Trustee with respect to, and only with respect to, the one or more series of
indenture securities for which it is Trustee.
Subordinated Indenture Provisions
Upon any distribution of our assets upon any dissolution, winding up,
liquidation or reorganization, the payment of the principal of and premium and
interest, if any, on subordinated securities is to be subordinated to the extent
provided in the Subordinated Indenture in right of payment to the prior payment
in full of all Senior Indebtedness, but our obligation to make payment of the
principal of and premium and interest, if any, on the subordinated securities
will not otherwise be affected. In addition, no payment on account of principal
or premium, sinking fund or interest, if any, may be made on the subordinated
securities at any time unless full payment of all amounts due in respect of the
principal and premium, sinking fund and interest on Senior Indebtedness has been
made or duly provided for in money.
In the event that, notwithstanding the foregoing, any payment by us is
received by the Subordinated Trustee or the holders of any of the subordinated
securities before all Senior Indebtedness is paid in full, the payment or
distribution shall be paid over to the holders of the Senior Indebtedness or on
their behalf for application to the payment of all the Senior Indebtedness
remaining unpaid until all the Senior Indebtedness has been paid in full, after
giving effect to any concurrent payment or distribution to the holders of the
Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness
upon this distribution, the holders of the subordinated securities will be
subrogated to the rights of the holders of the Senior Indebtedness to the extent
of payments made to the holders of the Senior Indebtedness out of the
distributive share of the subordinated securities.
By reason of the subordination, in the event of a distribution of assets
upon insolvency, certain of our general creditors may recover more, ratably,
than holders of the subordinated securities. The Subordinated Indenture provides
that the subordination provisions thereof will not apply to money and securities
held in trust pursuant to the defeasance provisions of the Subordinated
Indenture.
"Senior Indebtedness" is defined in the Subordinated Indenture as the
principal of and premium, if any, and unpaid interest on
o our indebtedness (including indebtedness of others guaranteed by
us), whether outstanding on the date of the Subordinated Indenture
or thereafter created, incurred, assumed or guaranteed, for money
borrowed, unless in the instrument creating or evidencing the same
or pursuant to which the same is outstanding it is provided that
such indebtedness is not senior or prior in right of payment to the
junior subordinated debt securities, and
o renewals, extensions, modifications and refundings of any of this
indebtedness.
The subordinated securities, are pari passu with and equal in right of
payment to our 7.44% Deferrable Interest Subordinated Debentures, Series A, our
Floating Rate Deferrable Interest Subordinated Debentures, Series B, our 7.25%
Deferrable Interest Subordinated Debentures, Series C and any guarantees issued
in connection therewith and will be pari passu with and equal in right of
payment to any debt securities or guarantees which may be issued in connection
with issuances of trust preferred securities by the Trust.
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If this prospectus is being delivered in connection with a series of
subordinated securities, the accompanying prospectus supplement or the
information incorporated by reference therein will set forth the approximate
amount of Senior Indebtedness outstanding as of a recent date.
Governing Law
The Indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New Jersey.
The Trustee under the Senior Indenture and the Subordinated Indenture
Wachovia Bank, National Association, the Trustee under our Senior
Indenture dated as of November 1, 1998 with respect to our senior debt
securities, will also be trustee under the Subordinated Indenture with respect
to our Subordinated Securities and the Trust Debt Indenture with respect to our
trust debt securities. Wachovia Bank, National Association, is trustee under
various indentures relating to our subsidiaries and affiliates. Our
subsidiaries, our affiliates and we maintain other normal banking relationships,
including credit facilities and lines of credit, with Wachovia Bank, National
Association.
DESCRIPTION OF THE TRUST DEBT SECURITIES
General
The trust debt securities will be issued in one or more series under the
Trust Debt Indenture to be entered into between us and Wachovia Bank, National
Association. The initial series of trust debt securities is provided for in the
form of the Trust Debt Indenture which is filed as an exhibit to the
registration statement of which this prospectus is part. The ranking of each
series of trust debt securities will be specified in the applicable prospectus
supplement. Each series of junior subordinated trust debt securities will rank
subordinate and junior in right of payment, to the extent and in the manner set
forth in the Trust Debt Indenture, to all of our Senior Indebtedness. See "--
Subordination."-- The Trust Debt Indenture does not limit the incurrence or
issuance of Senior Indebtedness by us.
You should read the relevant prospectus supplement for a description of
the material terms of any series of trust debt securities being offered,
including:
o the title of the series of trust debt securities;
o the aggregate principal amount of the series and any limit on the
aggregate principal amount of such series of trust debt securities;
o the date or dates on which the principal of the trust debt
securities shall be payable or how the date or dates will be
determined;
o the interest rate or rates, which may be fixed or variable, that the
trust debt securities will bear, if any, or how the rate or rates
will be determined;
o any terms regarding redemption;
o the ranking of the series of trust debt securities;
o the maximum Extension Period for such series of trust debt
securities; and
o any other material terms of the series of trust debt securities.
Certain federal income tax consequences and special considerations
relating to the applicable series of trust debt securities will be described in
an accompanying prospectus supplement.
Option to Extend Interest Payment Period
Under the Trust Debt Indenture, we have the right to defer payments of
interest by extending the interest payment period for a series of trust debt
securities for up to the specified maximum extension period provided
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for that series, except that no extension period can extend beyond the maturity
or any redemption date of that series of trust debt securities. We can also
extend or shorten an existing extension period. At the end of an extension
period, we will be obligated to pay all interest then accrued and unpaid
(together with interest on those accrued and unpaid amounts to the extent
permitted by applicable law). During any extension period, we may not declare or
pay any dividend on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of our capital stock. Upon the termination of any extension
period and the payment of all amounts then due, we can elect to begin a new
extension period. We will be required to give notice to the Trustee and cause
the Trustee to give notice to the holders of the applicable series of trust debt
securities of our election to begin an extension period, or any shortening or
extension of a period in advance of the applicable record date.
Subordination
Payments on the junior subordinated debt trust securities will be
subordinated to the prior payment in full of all amounts payable on our Senior
Indebtedness.
"Senior Indebtedness" is defined in the Trust Debt Indenture as the
principal of and premium, if any, and unpaid interest on
o our indebtedness (including indebtedness of others guaranteed by
us), whether outstanding on the date of the Trust Debt Indenture or
created later, incurred, assumed or guaranteed, for money borrowed,
unless the terms of that indebtedness provide that it is not senior
or prior in right of payment to the junior subordinated trust debt
securities, and
o renewals, extensions, modifications and refundings of that
indebtedness.
Upon any payment or distribution of our assets or securities, upon our
dissolution or winding-up or total or partial liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all amounts payable on Senior Indebtedness (including any
interest accruing on the Senior Indebtedness after the commencement of a
bankruptcy, insolvency or similar proceeding) will be paid in full before the
holders of the junior subordinated trust debt securities will be entitled to
receive from us any payment of principal of, premium, if any, or interest on,
the junior subordinated trust debt securities or distributions of any assets or
securities.
No direct or indirect payment by or on our behalf of principal of,
premium, if any, or interest on, the junior subordinated trust debt securities
will be made if there is
o a default in the payment of all or any portion of any Senior
Indebtedness or
o any other default pursuant to which the maturity of Senior
Indebtedness has been accelerated and, in either case, the required
notice has been given to the Trustee and the default has not have
been cured or waived by or on behalf of the holders of the Senior
Indebtedness.
If the Trustee or any holder of the junior subordinated trust debt
securities receives any payment of the principal of, premium, if any, or
interest on, the junior subordinated trust debt securities when that payment is
prohibited and before all amounts payable on Senior Indebtedness are paid in
full, then that payment will be received and held in trust for the holders of
Senior Indebtedness and will be paid to the holders of the Senior Indebtedness
remaining unpaid to the extent necessary to pay the Senior Indebtedness in full.
Nothing in the Trust Debt Indenture limits the right of the Trustee or the
holders of the junior subordinated trust debt securities to take any action to
accelerate the maturity of the junior subordinated trust debt securities or to
pursue any rights or remedies against us, as long as all Senior Indebtedness is
paid before holders of the junior subordinated trust debt securities are
entitled to receive any payment from us of principal of, premium, if any, or
interest on, the junior subordinated trust debt securities.
Upon the payment in full of all Senior Indebtedness, the holders of the
junior subordinated trust debt securities will be subrogated to the rights of
the holders of the Senior Indebtedness to receive payments from us or
distributions of our assets made on the Senior Indebtedness until the junior
subordinated trust debt securities are paid in full.
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Denominations, Registration and Transfer
Trust debt securities of a series are issuable only in registered form.
The Trust Debt Indenture also provides that trust debt securities of a series
may be issuable in global form. See "Description of the Senior and Subordinated
Debt Securities -- Book-Entry Debt Securities." Unless otherwise provided in the
prospectus supplement, trust debt securities (other than global securities,
which may be of any denomination) are issuable in denominations of $1,000 or any
integral multiples of $1,000.
Trust debt securities will be exchangeable for other registered securities
of the same series. Registered securities of a series may be presented for
registration of transfer and for exchange
o at each office or agency required to be maintained by us for payment
of such series as described in "-- Payment and Paying Agents" below,
and
o at each other office or agency that we may designate from time to
time for those purposes.
No service charge will be made for any transfer or exchange of trust
debt securities, but we may require payment of any tax or other
governmental charge payable in connection with the transfer or
exchange.
We will not be required to
o issue, register the transfer of or exchange trust debt securities
during a period beginning at the opening of business 15 days before
any selection of trust debt securities of that series to be redeemed
and ending at the close of business on the day of mailing of the
relevant notice of redemption;
o register the transfer of or exchange any trust debt security, or
portion thereof, called for redemption, except the unredeemed
portion of any trust debt security being redeemed in part; or
o issue, register the transfer of or exchange any trust debt security
which has been surrendered for repayment at the option of the
holder, except the portion, if any, of the trust debt security not
to be so repaid.
Payment and Paying Agents
Unless otherwise provided in the prospectus supplement, premium, if any,
and interest, if any, on trust debt securities will be payable at any office or
agency to be maintained by us in Morristown, New Jersey and The City of New
York, except that at our option interest may be paid
o by check mailed to the address of the person entitled thereto
appearing in the security register or
o by wire transfer to an account maintained by the person entitled
thereto as specified in the security register. Unless otherwise
provided in the prospectus supplement, payment of any installment of
interest due on any interest payment date for trust debt securities
will be made to the person in whose name the trust debt security is
registered at the close of business on the regular record date for
that interest.
We may from time to time designate additional offices or agencies, approve
a change in the location of any office or agency and, except as provided above,
rescind the designation of any office or agency.
Certain Additional Covenants
We will covenant that we may not declare or pay any distribution on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
our capital stock
o during an extension period,
o if there has occurred and is continuing an event of default under
the Trust Debt Indenture, or
o if we are in default under the preferred securities guarantee.
Any waiver of any event of default will require the approval of at least a
majority of the aggregate principal amount of the trust debt securities of a
particular series or, if the trust debt securities are held by the Trust, the
approval of the holders of at least a majority in aggregate liquidation amount
of the preferred trust securities of the Trust; except that an event of default
resulting from the failure to pay the principal of, premium, if any, or interest
on, the trust debt securities cannot be waived.
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Modification of the Trust Debt Indenture
We and the Trustee, without notice to or the consent of any holders of
trust debt securities, may amend or supplement the Trust Debt Indenture for any
of the following purposes:
o to cure any ambiguity, defect or inconsistency;
o to comply with the provisions of the Trust Debt Indenture regarding
consolidation, merger or sale, conveyance, transfer or lease of our
properties as an entirety or substantially as an entirety;
o to provide for uncertificated trust debt securities in addition to
or in place of certificated trust debt securities;
o to make any other change that does not in our reasonable judgment
adversely affect the rights of any holder of the trust debt
securities; or
o to set forth the terms and conditions, which shall not be
inconsistent with the Trust Debt Indenture, of any additional series
of trust debt securities and the form of trust debt securities of
that series.
In addition, we and the Trustee may modify the Trust Debt Indenture or any
supplemental indenture or waive our future compliance with the provisions of the
Trust Debt Indenture, with the consent of the holders of at least a majority of
the aggregate principal amount of the trust debt securities of each affected
series except that we need the consent of each holder of affected trust debt
securities, for any modification that would:
o reduce the principal amount of, or interest on, the trust debt
securities or change how the principal or interest is calculated;
o reduce the principal amount of outstanding trust debt securities of
any series the holders of which must consent to an amendment of the
Trust Debt Indenture or a waiver;
o change the stated maturity of the principal of, or interest on, the
trust debt securities;
o change the redemption provisions applicable to the trust debt
securities adversely to the holders thereof;
o impair the right to institute suit for the enforcement of any
payment with respect to the trust debt securities;
o change the currency in which payments with respect to the trust debt
securities are to be made; or
o change the ranking provisions applicable to the trust debt
securities adversely to the holders thereof.
If the trust debt securities are held by the Trust, no modification will be made
that adversely affects the holders of the preferred trust securities of the
Trust, and no waiver of any event of default with respect to the trust debt
securities or compliance with any covenant under the Trust Debt Indenture will
be effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation amount of the preferred trust securities of the Trust
or the holder of each preferred trust security, as applicable.
Events of Default
The following are events of default under the Trust Debt Indenture with
respect to any series of trust debt securities unless we state otherwise in the
applicable prospectus supplement:
o we do not pay interest on a trust debt security of the series within
30 days of its due date (other than the deferral of interest
payments during an extension period);
o we do not pay the principal of, or premium on, a trust debt security
of the series on its due date;
o we remain in breach of a covenant in respect of the trust debt
securities of the series for 60 days after we receive written notice
of default stating we are in breach;
o we file for bankruptcy or a court appoints a custodian or orders our
liquidation under any bankruptcy law or certain other events of
bankruptcy, insolvency or reorganization occur.
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In case an event of default has occurred and is continuing, other than one
relating to bankruptcy, insolvency or reorganization affecting us in which case
the principal of, premium, if any, and any interest on, all of the trust debt
securities shall become immediately due and payable, the Trustee or the holders
of at least 25% in aggregate principal amount of the trust debt securities of
that series may declare the principal, together with interest accrued thereon,
of all the trust debt securities of that series to be due and payable. If
neither the Trustee nor the holders make that declaration then, if the trust
debt securities are held by the Trust, the holders of at least 25% in aggregate
liquidation amount of the preferred trust securities shall have the right to
make that declaration by written notice to us and the Trustee. The holders of at
least a majority in aggregate principal amount of the series of trust debt
securities, by notice to the Trustee, can rescind an acceleration, but if the
declaration was made by the holders of the preferred trust securities, the
holders of at least a majority in aggregate liquidation amount of the preferred
trust securities must consent to the rescission of the acceleration. We will be
required to furnish to the Trustee an annual statement as to our compliance with
all conditions and covenants under the Trust Debt Indenture and the trust debt
securities and as to any event of default.
Consolidation, Merger, Sale or Conveyance
We may not consolidate with or merge with or into any other person or
sell, convey, transfer or lease our properties and assets as an entirety or
substantially as an entirety to any person, unless
o the successor person is organized under the laws of the United
States or any state thereof or the District of Columbia and
expressly assumes by a supplemental indenture all of our obligations
under the trust debt securities and the Trust Debt Indenture;
o immediately after the transaction, no default exists; and
o certain other conditions in the Trust Debt Indenture are met.
Defeasance and Discharge
Under the terms of the Trust Debt Indenture, we will be discharged from
any and all obligations in respect of the trust debt securities of any series
if, among other conditions, we deposit with the Trustee, in trust, (1) cash
and/or (2) U.S. government or U.S. government agency notes or bonds that will
generate enough cash to make interest principal and other payments on the trust
debt securities on their various due dates.
Information Concerning the Trustee
Subject to the provisions of the Trust Debt Indenture relating to its
duties, the Trustee will be under no obligation to exercise any of its rights or
powers under the Trust Debt Indenture at the request or direction of the holders
of any series of trust debt securities or the holders of the preferred trust
securities, unless those holders provide to the Trustee reasonable security and
indemnity. If the required indemnity is provided, the holders of at least a
majority in aggregate principal amount of any series of trust debt securities
affected or the holders of at least a majority in aggregate liquidation amount
of the preferred trust securities (with each series voting as a class), as
applicable, will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee with respect
to that series of trust debt securities or exercising any trust or power
conferred on the Trustee.
The Trust Debt Indenture will contain limitations on the right of the
Trustee, as our creditor, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. In addition, the Trustee may be deemed to have a conflicting interest
and may be required to resign as Trustee if at the time of an event of default
(1) it is our creditor or (2) there is a default under the indenture(s) referred
to below.
Wachovia Bank, National Association will be the Trustee under our Trust
Debt Indenture and also is the trustee under our Senior Indenture and will be
trustee under our Subordinated Indenture and is trustee under various indentures
relating to our subsidiaries and affiliates. Our subsidiaries, our affiliates
and we maintain other normal banking relationships, including credit facilities
and lines of credit, with Wachovia Bank, National Association.
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Governing Law
The Trust Debt Indenture and the trust debt securities will be governed by
and construed in accordance with the laws of the State of New Jersey.
DESCRIPTION OF THE PREFERRED TRUST SECURITIES
The Trust may issue preferred trust securities and common trust securities
under the Trust Agreement, which we refer to in this prospectus as the "trust
securities." Material provisions of the Trust Agreement are summarized below.
Because this section is a summary, it does not describe every aspect of the
trust securities and the Trust Agreement. The form of Trust Agreement was filed
with the SEC and you should read the Trust Agreement for provisions that may be
important to you. The Trust Agreement has been qualified as an indenture under
the Trust Indenture Act of 1939.
General
The Trust Agreement authorizes the Trust to issue the preferred trust
securities and the common trust securities. These trust securities will
represent undivided beneficial interests in the assets of the Trust. We will own
all of the issued and outstanding common trust securities of the Trust, with an
aggregate liquidation amount equal to at least 3% of the total capital of the
Trust. When the Trust issues its preferred trust securities, holders of the
preferred trust securities will own all of the issued and outstanding preferred
trust securities of the Trust. The preferred trust securities will be
substantially identical to the common trust securities and will rank equally
with the common trust securities, except as described under "Subordination of
Common Trust Securities." The proceeds from the sale of the preferred trust
securities and the common trust securities will be used by the Trust to purchase
our trust debt securities which will be held in trust by the property trustee
for the benefit of the holders of the trust securities. We will execute a
guarantee agreement for the benefit of the holders of preferred trust securities
(the "guarantee") which will be subordinate and junior in right of payment to
all of our general liabilities. Under the guarantee, we will agree to make
payments of distributions and payments on redemption or liquidation with respect
to the preferred trust securities, but only to the extent the Trust holds funds
available for these payments and has not made them. See "Description of the
Preferred Securities Guarantee" below.
A prospectus supplement relating to the preferred trust securities will
include specific terms of those securities and of the trust debt securities. For
a description of some specific terms that will affect both the preferred trust
securities and the trust debt securities and your rights under each, see
"Description of the Trust Debt Securities" above.
Distributions
The only income of the Trust available for distribution to the holders of
preferred trust securities will be payments on the trust debt securities. If we
fail to make interest payments on the trust debt securities, 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 by us as
described below.
Distributions on the preferred trust securities will be payable at a rate
specified (or at a rate whose method of determination is described) in an
accompanying prospectus supplement. Unless otherwise specified in the prospectus
supplement, the amount of distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified in the prospectus supplement, distributions on
the preferred trust securities will be cumulative and will accumulate whether or
not there are funds of the Trust available for payment of distributions from the
date of original issuance and will be payable in arrears on the dates specified
in the prospectus supplement except as otherwise described below. Unless
otherwise specified in the prospectus supplement, distribution payments due on a
day that is not a business day will be made on the next day that is a business
day (and without any interest or other payment in respect to the delay), except
that if the next business
29
day falls in the next calendar year, payment will be made on the immediately
preceding business day (each date on which distributions are payable as
described is referred to as a "distribution date"). Unless otherwise specified
in the prospectus supplement, a "business day" means any day other than a
Saturday, Sunday or a day on which banks in The City of New York or the State of
New Jersey are required to remain closed.
Distributions on the preferred trust securities will be payable to the
holders thereof as they appear on the securities register of the Trust on the
relevant record date, which, as long as the preferred trust securities remain in
book-entry-only form, will be one business day prior to the relevant
distribution date. Payments will be made as described under "Description of the
Senior and Subordinated Debt Securities -- Book-Entry Debt Securities." In the
event that any preferred trust securities are not in book-entry-only form, the
relevant record date for those preferred trust securities will be specified in
the applicable prospectus supplement.
So long as no event of default has occurred and is continuing with respect
to the trust debt securities, we will have the right to time to defer payments
of interest by extending the interest payment period on the trust debt
securities for up to the maximum period specified in the accompanying prospectus
supplement except that no extension period can extend beyond the maturity or any
redemption date of the trust debt securities. We can also extend or shorten an
existing extension period. If interest payments on the trust debt securities are
deferred, distributions on the preferred trust securities would also be deferred
by the Trust during that extension period, but the amount of distributions to
which holders of the preferred trust securities would be entitled will continue
to accumulate at the annual rate applicable to those distributions, compounded
with the same frequency with which distributions are payable. During any
extension period, we may not declare or pay any distribution on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of our
capital stock. Upon the termination of any extension period and the payment of
all amounts then due, we can elect to begin a new extension period. See
"Description of the Trust Debt Securities -- Option to Extend Interest Payment
Period."
Redemption
Upon the payment of the trust debt securities at maturity or upon
redemption, the proceeds from that payment will be applied by the property
trustee to redeem the same amount of the trust securities at a redemption price
equal to the liquidation amount of the trust securities plus all accumulated and
unpaid distributions to the redemption date. The redemption terms of the trust
debt securities and the trust securities will be set forth in the accompanying
prospectus supplement.
If less than all the trust securities are to be redeemed on a redemption
date, then the aggregate amount of trust securities to be redeemed will be
selected by the property trustee among the preferred trust securities and common
trust securities pro rata based on the respective aggregate liquidation amounts
of the preferred trust securities and common trust securities, subject to the
provisions of "-- Subordination of Common Trust Securities" below.
Redemption Procedures
Notice of any redemption of trust securities will be given by the property
trustee to the holders of the trust securities to be redeemed not less than 30
nor more than 60 days prior to the redemption date. If a notice of redemption is
given with respect to any trust securities, then, to the extent funds are
available therefor, the Trust will irrevocably deposit with the paying agent for
the trust securities funds sufficient to pay the applicable redemption price for
the trust securities being redeemed on the redemption date and will give the
paying agent irrevocable instructions and authority to pay the redemption price
to the holders of the trust securities upon surrender thereof. Notwithstanding
the foregoing, distributions payable on or prior to the redemption date for any
trust securities called for redemption shall be payable to the holders of the
trust securities as they appear on the securities register for the trust
securities on the relevant record dates for the related distribution dates.
If notice of redemption shall have been given and funds irrevocably
deposited as required, then upon the date of such deposit, all rights of the
holders of the trust securities so called for redemption will cease, except the
right of the holders of the trust securities to receive the redemption price,
but without interest thereon, and the trust securities will cease to be
outstanding. In the event that any redemption date for trust securities is not a
business day, then the redemption price will be payable on the next day that is
a business day (and without any interest or other payment in respect of any such
delay), except that if such business day falls in the next calendar year, the
redemption price will be payable on the immediately preceding business day. In
the event that payment
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of the redemption price in respect of any trust securities called for redemption
is improperly withheld or refused and not paid either by the Trust thereof or by
us pursuant to the guarantee as described under "Description of the Preferred
Securities Guarantee," Distributions on those trust securities will continue to
accumulate at the then applicable rate from the original redemption date to the
date of payment, in which case the actual payment date will be considered the
redemption date for purposes of calculating the redemption price.
Subject to applicable law, including United States federal securities law,
we or our affiliates may at any time and from time to time purchase outstanding
preferred trust securities by tender, in the open market or by private
agreement.
If preferred trust securities are partially redeemed on a redemption date,
a corresponding percentage of the common trust securities will be redeemed. The
particular preferred trust securities to be redeemed will be selected by the
property trustee by such method as the property trustee shall deem fair and
appropriate. 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.
Subordination of Common Trust Securities
Payments on the trust securities will be made pro rata based on the
respective aggregate liquidation amounts of the common and preferred trust
securities. If an event of default has occurred and is continuing with respect
to the trust debt securities, no payments will be made on any common trust
securities unless payment in full in cash of all accumulated and unpaid
distributions on all outstanding preferred trust securities for all distribution
periods terminating on or prior to that time, or in the case of a dissolution or
redemption, the full amount of the redemption price or liquidation distribution
on all outstanding preferred trust securities shall have been made or provided
for, and all funds available to the property trustee shall first be applied to
the payment in full in cash of all payments on all outstanding preferred trust
securities then due and payable.
If an event of default has occurred and is continuing with respect to the
trust debt securities, the holder of the common trust securities will be deemed
to have waived any right to act with respect to the event of default until the
effect of the event of default has been cured, waived or otherwise eliminated
with respect to the preferred trust securities. Until the event of default has
been cured, waived or otherwise eliminated, the property trustee shall act
solely on behalf of the holders of the preferred trust securities and not on
behalf of us, as holder of the common trust securities, and only the holders of
the preferred trust securities will have the right to direct the property
trustee to act on their behalf.
Liquidation Distribution upon Dissolution
Under the Trust Agreement, the Trust will be dissolved on the earliest to
occur of:
o the expiration of the term of the Trust;
o our bankruptcy, dissolution or liquidation or an acceleration of the
maturity of the trust debt securities held by the Trust;
o our election to dissolve the Trust and, after satisfaction of
liabilities to creditors of the Trust, the distribution of the trust
debt securities to the holders of the trust securities;
o the redemption of all the trust securities; and
o an order for the dissolution of the Trust entered by a court of
competent jurisdiction.
Our election to dissolve the Trust shall be made by giving written notice
to the trustees not less than 30 days prior to the date of distribution of the
trust debt securities and shall be accompanied by a legal opinion stating that
the event will not be a taxable event to the holders of the trust securities for
federal income tax purposes.
If the Trust is dissolved as a result of the expiration of its term, a
bankruptcy event, acceleration of maturity of the trust debt securities or a
court order, it will be liquidated by the trustees as expeditiously as the
trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
holders of its trust securities a like amount of the trust debt securities,
unless that distribution is determined by the property trustee not to be
practical, in which event holders will be entitled
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to receive out of the Trust's assets available for distribution to holders,
after satisfaction of liabilities to its creditors as provided by applicable
law, an amount equal to the aggregate liquidation amount per trust security
specified in the accompanying prospectus supplement plus accumulated and unpaid
distributions to the date of payment (the "liquidation distribution"). If the
liquidation distribution with respect to the preferred trust securities 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. The
holders of the common trust securities will be entitled to receive the
liquidation distribution upon any liquidation pro rata with the holders of
preferred trust securities, except that if an event of default has occurred and
is continuing, the preferred trust securities will have a priority over the
common trust securities with respect to payment of the liquidation distribution.
Trust Agreement Event of Default; Notice
An event of default with respect to the trust debt securities will
constitute a "Trust Agreement event of default" with respect to the preferred
trust securities.
Within 90 days after the occurrence of any Trust Agreement event of
default actually known to the property trustee, the property trustee will send
notice of it to the holders of the trust securities, the administrative trustee
and us, unless it has been cured or waived. We and the administrative trustee
are required to file annually with the property trustee a certificate as to
whether or not we are in compliance with all the conditions and covenants
applicable to us under the Trust Agreement.
Under the Trust Agreement, if the property trustee has failed to enforce
its rights under the Trust Agreement or the Trust Debt Indenture to the fullest
extent permitted by law and subject to the terms of the Trust Agreement and the
Trust Debt Indenture, any holder of the preferred trust securities may institute
a legal proceeding directly to enforce the property trustee's rights under the
Trust Agreement or the Trust Debt Indenture with respect to trust debt
securities having an aggregate principal amount equal to the aggregate
liquidation amount of the preferred trust securities of such holder without
first instituting a legal proceeding against the property trustee or any other
person. To the extent that any action under the Trust Debt Indenture is entitled
to be taken by the holders of at least a specified percentage of the principal
amount of the trust debt securities, holders of that specified percentage of the
preferred trust securities may take that action if it is not taken by the
property trustee. If a Trust Agreement event of default attributable to our
failure to pay principal of or premium, if any, or interest on the trust debt
securities has occurred and is continuing, then each holder of preferred trust
securities may institute a legal proceeding directly against us for enforcement
of payment to that holder, all as provided in the Trust Debt Indenture.
If an event of default has occurred and is continuing with respect to a
series of trust debt securities, the preferred trust securities will have a
preference over the common trust securities with respect to the payment of
distributions and amounts payable on redemption and liquidation as described
above. See "-- Liquidation Distribution upon Dissolution" and "-- Subordination
of Common Trust Securities."
Removal of Trustees
Unless a Trust Agreement event of default has occurred and is continuing,
we, as the holder of the common trust securities, may remove any trustee under
the trust agreement at any time. If a Trust Agreement event of default has
occurred and is continuing, the holders of a majority of the total liquidation
amount of the outstanding preferred trust securities may remove the property
trustee or the Delaware trustee, or both of them. We, as the holder of the
common trust securities, may remove the 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.
Holders of preferred trust securities will have no right to appoint or
remove the administrative trustee of the Trust, who may be appointed, removed or
replaced solely by us as the holder of the common trust securities.
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Co-Trustees and Separate Property Trustee
Unless a Trust Agreement event of default has occurred and is continuing,
in order to meet various legal requirements, the holder of the common trust
securities and the administrative trustee shall have the power
o to appoint one or more persons approved by the property trustee
either to act as co-trustee, jointly with the property trustee, of
all or any part of specified trust property, or to act as separate
trustee of that trust property, and
o to vest in that person or persons in that capacity any property,
title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement.
If a Trust Agreement event of default has occurred and is continuing, only
the property trustee will have power to make this appointment.
Merger or Consolidation of Trustees
Any corporation or other entity into which any trustee may be merged or
converted or with which it may be consolidated, or any corporation or other
entity resulting from any merger, conversion or consolidation to which any
trustee shall be a party, or any corporation or other entity succeeding to all
or substantially all the corporate trust business of any trustee, shall be the
successor of such trustee under the Trust Agreement, as long as the corporation
or other entity is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other entity,
except as described below or in "-- Liquidation Distribution upon Dissolution."
The Trust may, at our request, with the consent of the administrative trustee
and without the consent of the holders of the trust securities, merge with or
into, consolidate, amalgamate, or be replaced by a trust organized under the
laws of any state, as long as
o the successor entity either
- expressly assumes all of the obligations of the Trust with
respect to the trust securities or
- substitutes for the trust securities other securities
substantially similar to the trust securities (the "successor
securities") so long as the successor securities rank the same
as the trust securities with respect to the payment of
distributions and payments upon redemption, liquidation and
otherwise;
o we appoint a trustee of the successor entity with the same powers
and duties as the property trustee with respect to the trust debt
securities;
o the successor securities are listed on any national securities
exchange or other organization on which the trust securities are
then listed;
o the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the rating of preferred trust
securities (including any successor securities) to be downgraded,
placed under surveillance or review or withdrawn by any nationally
recognized statistical rating organization;
o the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the trust securities (including any
successor securities) in any material respect;
o the successor entity has a purpose substantially similar to that of
the Trust;
o prior to the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, we and the property trustee have
received a legal opinion stating that
- such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the trust
securities (including any successor securities) in any
material respect, and
33
- following the merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease neither the Trust
nor the successor entity will be required to register as an
investment company under the Investment Company Act of 1940,
and the Trust (or the successor entity) will continue to be
classified as a grantor trust for United States federal income
tax purposes; and
o we or any permitted successor assignee own all of the common
securities of the successor entity and guarantee the obligations of
the successor entity under the successor securities at least to the
extent provided by the related guarantee and Trust Agreement.
The Trust will not, except with the consent of all holders of the trust
securities, consolidate, amalgamate, merge with or into, or be replaced by, any
other entity, or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if that action would cause the Trust or the successor
entity not to be classified as a grantor trust for federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under "-- Mergers, Consolidations,
Amalgamations or Replacements of the Trust" and "Description of the Preferred
Securities Guarantee -- Amendments and Assignment" and as otherwise required by
law and the Trust Agreement, the holders of the trust securities will have no
voting rights.
The Trust Agreement may be amended from time to time by us and the
trustees, without the consent of the holders of the trust securities, (1) to
cure any ambiguity, defect or inconsistency or (2) to make any other change that
does not adversely affect in any material respect the interests of any holder of
the preferred trust securities.
The Trust Agreement may be amended by us and the trustees in any other
respect, with the consent of the holders of a majority in aggregate liquidation
amount of the outstanding preferred trust securities, except to
o change the amount, timing or currency or otherwise adversely affect
the method of payment of any distribution or liquidation
distribution,
o restrict the right of a holder of any preferred trust securities to
institute suit for enforcement of any distribution, redemption price
or liquidation distribution,
o change the purpose of the Trust,
o authorize the issuance of any additional beneficial interests in the
Trust,
o change the redemption provisions,
o change the conditions precedent for us to elect to dissolve the
Trust and distribute the trust debt securities to the holders of the
preferred trust securities or
o affect the limited liability of any holder of the preferred trust
securities, which amendment requires the consent of each affected
holder of the preferred trust securities.
No amendment may be made without receipt by the Trust of a legal opinion
stating that the amendment will not affect the Trust's status as a grantor trust
for federal income tax purposes or its exemption from regulation as an
investment company under the Investment Company Act of 1940.
The Trustees shall not
o direct the time, method and place of conducting any proceeding for
any remedy available to a trustee under the Trust Debt Indenture or
executing any trust or power conferred on that trustee with respect
to the trust debt securities,
o waive any past default under the Trust Debt Indenture,
o exercise any right to rescind or annul an acceleration of the
principal of the trust debt securities or
o consent to any amendment or modification of the Trust Debt
Indenture, where consent shall be required,
34
without, in each case, obtaining the consent of the holders of a majority in
aggregate liquidation amount of all outstanding preferred trust securities;
provided, however, that where a consent under the Trust Debt Indenture would
require the consent of each affected holder of trust debt securities, no consent
shall be given by the property trustee without the prior consent of each holder
of the preferred trust securities. The trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the preferred
trust securities except by subsequent vote of those holders. The property
trustee shall notify all holders of preferred trust securities of any notice
received from the trustee under the Trust Debt Indenture as a result of the
Issuer thereof being the holder of the trust debt securities. In addition to
obtaining the consent of the holders of the preferred trust securities prior to
taking any of these actions, the trustees shall obtain a legal opinion stating
that the Trust will not be classified as an association taxable as a corporation
or a partnership for federal income tax purposes as a result of that action and
will continue to be classified as a grantor trust for federal income tax
purposes.
Any required consent of holders of preferred trust securities may be given
at a meeting of holders of the preferred trust securities convened for that
purpose or pursuant to written consent without a meeting and without prior
notice. The property trustee will cause a notice of any meeting at which holders
of preferred trust securities are entitled to vote, to be given to each holder
of record of preferred trust securities in the manner set forth in the Trust
Agreement.
Notwithstanding that holders of preferred trust securities are entitled to
vote or consent under certain circumstances, any preferred trust securities that
are owned by us, the Trustees or any affiliate of ours or any Trustee shall, for
purposes of a vote or consent, be treated as if they were not outstanding.
Global Preferred Trust Securities
Unless otherwise specified in the applicable prospectus supplement, the
preferred trust securities will initially be issued in fully registered global
form that will be deposited with, or on behalf of, a depositary. Global
preferred trust securities may be issued only in fully registered form and in
either temporary or permanent form. Unless and until a global preferred trust
security is exchanged in whole or in part for the individual preferred trust
securities represented thereby, the depositary holding the global preferred
trust security may transfer the global preferred trust security only to its
nominee or successor depositary or vice versa and only as a whole. Unless
otherwise indicated in the applicable prospectus supplement, the depositary for
the global preferred trust securities will be DTC. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. These limits and laws may
impair the ability to transfer beneficial interests in global preferred trust
securities. See "Description of the Senior and Subordinated Debt Securities --
Book-Entry Debt Securities" for a description of DTC and its procedures.
Information Concerning the Property Trustee
The property trustee is the sole trustee under the Trust Agreement for
purposes of the Trust Indenture Act of 1939 and will have and be subject to all
of the duties and responsibilities of an indenture trustee under the Trust
Indenture Act of 1939. The property trustee, other than during the occurrence
and continuance of a Trust Agreement event of default, undertakes to perform
only such duties as are specifically set forth in the Trust Agreement and, upon
a Trust Agreement event of default, must use the same degree of care and skill
in the exercise thereof as a prudent person would exercise or use in the conduct
of his or her own affairs. Subject to this provision, the property trustee is
under no obligation to exercise any of the powers vested in it by the Trust
Agreement at the request of any holder of preferred trust securities unless it
is offered reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred thereby. If no Trust Agreement event of
default has occurred and is continuing, and the property trustee is required to
decide between alternative courses of action, construe ambiguous provisions in
the Trust Agreement or is unsure of the application of any provision of the
Trust Agreement, and the matter is not one on which holders of preferred trust
securities are entitled under the Trust Agreement to vote, then the property
trustee shall take such action as is directed by us and, if not so directed, may
take such action as it deems advisable and in the best interests of the holders
of the trust securities and will have no liability except for its own negligent
action, negligent failure to act or willful misconduct.
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Books and Records
The books and records of the Trust will be maintained at the principal
office of the Trust and will be open for inspection by each holder of preferred
trust securities or any authorized representative for any purpose reasonably
related to the holder's interest in the Trust during normal business hours.
Payment of Preferred Trust Securities and Paying Agent
Unless we indicate differently in a prospectus supplement, payments in
respect of the preferred trust securities will be made to the depositary, which
will credit the relevant participants' accounts on the applicable distribution
dates or, if the preferred trust securities are not held by the depositary,
payments will be made on the applicable distribution dates by check mailed to
the address of the holder entitled thereto appearing on the preferred trust
security register or in immediately available funds upon redemption. The paying
agent will initially be the property trustee and any co-paying agent chosen by
the property trustee and acceptable to the administrative trustee and us, which
may be us. The paying agent may resign upon 30 days' written notice to the
administrative trustee, the property trustee and us. In the event that the
property trustee shall no longer be the paying agent, the administrative trustee
will appoint a successor, which shall be a bank, trust company or affiliate of
ours acceptable to the property trustee and us to act as paying agent.
Registrar and Transfer Agent
The property trustee will act as registrar and transfer agent for the
preferred trust securities. Registration of transfers of preferred trust
securities will be made without charge by or on behalf of the Trust, but the
Trust may require payment of any tax or other governmental charges that may be
imposed in connection with any transfer or exchange of preferred trust
securities.
Miscellaneous
Holders of the preferred trust securities have no preemptive or similar
rights.
Governing Law
The Trust Agreement, the preferred trust securities and the common trust
securities provide that they are to be governed by and construed in accordance
with the laws of the State of Delaware.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Material provisions of the preferred securities guarantee that we will
execute and deliver for the benefit of the holders of the preferred trust
securities are summarized below. Because this section is a summary, it does not
describe every aspect of the preferred securities guarantee. The form of
preferred securities guarantee was filed with the SEC and you should read it for
provisions that may be important to you. The preferred securities guarantee will
be qualified as an indenture under the Trust Indenture Act of 1939.
Wachovia Bank, National Association, will act as guarantee trustee under
the preferred securities guarantee. The guarantee trustee will hold the
preferred securities guarantee for the benefit of the holders of the preferred
trust securities.
General
We will irrevocably agree, to pay in full, to the holders of the preferred
trust securities, the guarantee payments set forth below (except to the extent
previously paid), as and when due, regardless of any defense, right of set-off
or counterclaim which the Trust may have or assert. The following payments, to
the extent not paid by the Trust, will be subject to the applicable guarantee:
o any accumulated and unpaid distributions required to be paid on the
preferred trust securities, to the extent that the Trust has funds
available therefor,
o the redemption price, to the extent that the Trust has funds
available therefor, and
36
o upon a voluntary or involuntary termination, winding-up or
liquidation of the Trust (unless the trust debt securities are
redeemed or distributed to holders of the preferred trust securities
in accordance with their terms), the lesser of
- the aggregate of the liquidation amount specified in the
prospectus supplement per preferred trust security plus all
accumulated and unpaid distributions on the preferred trust
securities to the date of payment, to the extent the Trust has
funds available therefor and
- the amount of assets of the Trust remaining available for
distribution to holders of the preferred trust securities upon
a dissolution and liquidation of the Trust.
Our obligation to make a guarantee payment may be satisfied by direct
payment by us of the required amounts to the holders of the preferred trust
securities or by causing the Trust to pay those amounts to the holders. While
our assets will not be available pursuant to the guarantee for the payment of
any distribution, liquidation distribution or redemption price on any preferred
trust securities if the Trust does not have funds available therefor as
described above, we have agreed under the Trust Agreement to pay all expenses of
the Trust except its obligations under its trust securities.
No single document executed by us in connection with the issuance of the
preferred trust securities will provide for our full, irrevocable and
unconditional guarantee of the preferred trust securities. It is only the
combined operation of our obligations under the guarantee, the Trust Agreement,
the trust debt securities and the Trust Debt Indenture that has the effect of
providing a full, irrevocable and unconditional guarantee of the Trust's
obligations under the preferred trust securities. See "Relationship Among the
Preferred Trust Securities, the Trust Debt Securities and the Preferred
Securities Guarantee."
Status of the Guarantee
The guarantee will constitute our unsecured obligation and will rank
subordinate and junior in right of payment to all of our general liabilities.
The Trust Agreement provides that each holder of preferred trust securities by
acceptance thereof agrees to the subordination provisions and other terms of the
guarantee. The guarantee will rank equally with all other guarantees issued by
us. The guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against us
to enforce its rights under the guarantee without first instituting a legal
proceeding against any other person or entity). The guarantee will not be
discharged except by payment of the guarantee payments in full to the extent not
previously paid or upon distribution to the holders of the preferred trust
securities of the trust debt securities pursuant to the trust agreement.
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of the preferred trust securities (in which case no
consent of the holders will be required), the guarantee may only be amended with
the prior approval of the holders of a majority in aggregate liquidation amount
of the preferred trust securities (excluding any preferred trust securities held
by us or an affiliate). The manner of obtaining any approval will be as set
forth under "Description of the Preferred Trust Securities -- Voting Rights;
Amendment of Trust Agreement." All agreements contained in the guarantee will
bind our successors, assigns, receivers, trustees and representatives and will
inure to the benefit of the holders of the preferred trust securities.
Guarantee Events of Default
An event of default under a guarantee (a "guarantee event of default")
will occur upon our failure to perform any of our payment or other obligations
thereunder, provided that except with respect to a guarantee event of default
resulting from a failure to make any of the guarantee payments, we shall have
received notice of the guarantee event of default from the guarantee trustee and
shall not have cured such guarantee event of default within 60 days after
receipt of such notice. The holders of a majority in aggregate liquidation
amount of the preferred trust securities (excluding any preferred trust
securities held by us or an affiliate) will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
guarantee trustee under the guarantee or to direct the exercise of any trust or
power conferred upon the guarantee trustee under the guarantee.
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Any holder of the preferred trust securities may institute a legal
proceeding directly against us to enforce that holder's rights under the
guarantee without first instituting a legal proceeding against the Trust, the
guarantee trustee or any other person or entity.
We, as guarantor, will be required to file annually with the guarantee
trustee a certificate as to whether or not we are in compliance with all the
conditions and covenants applicable to us under the guarantee.
Information Concerning the Guarantee Trustee
The guarantee trustee, other than during the occurrence and continuance of
a guarantee event of default, undertakes to perform only such duties as are
specifically set forth in the guarantee and, upon a guarantee event of default,
must exercise the rights and powers vested in it by the guarantee and use the
same degree of care and skill in the exercise thereof as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the guarantee trustee is under no obligation to exercise any of the
powers vested in it by any guarantee at the request of any holder of preferred
trust securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
Termination of the Guarantee
The guarantee will terminate and be of no further force and effect upon
full payment of the redemption price or liquidation distribution for the
preferred trust securities or upon distribution of the trust debt securities to
the holders of the preferred trust securities. The guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of the preferred trust securities must restore payment of any sums paid under
the preferred trust securities or the guarantee.
Governing Law
The preferred securities guarantee provides that it is to be governed by
and construed in accordance with the laws of the State of New Jersey.
RELATIONSHIP AMONG THE PREFERRED TRUST SECURITIES, THE TRUST
DEBT SECURITIES AND THE PREFERRED SECURITIES GUARANTEE
Payments of distributions and redemption and liquidation payments due on
the preferred trust securities (to the extent the Trust has funds available for
such payments) will be guaranteed by us as set forth under "Description of the
Preferred Securities Guarantee." No single document executed by us in connection
with the issuance of the preferred trust securities will provide for our full,
irrevocable and unconditional guarantee of the preferred trust securities. It is
only the combined operation of our obligations under the guarantee, the Trust
Agreement, the trust debt securities and the Trust Debt Indenture that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the preferred trust securities.
A holder of any preferred trust security may institute a legal proceeding
directly against us to enforce the property trustee's rights under the Trust
Agreement, Trust Debt Indenture or guarantee without first instituting a legal
proceeding against the property trustee, trustee under the Trust Debt Indenture
or the guarantee trustee, the Trust or any other person or entity if that
trustee fails to enforce that particular holder's rights thereunder.
Notwithstanding the foregoing, if a Trust Agreement event of default
attributable to our failure to pay principal of or premium, if any, or interest
on the trust debt securities has occurred and is continuing, then each holder of
preferred trust securities of the series may institute a legal proceeding
directly against us for enforcement of any such payment to such holder, all as
provided in the Trust Debt Indenture.
As long as we make payments of interest and other payments when due on the
trust debt securities, those payments will be sufficient to cover the payment of
distributions and redemption and liquidation distributions due on the preferred
trust securities, primarily because
o the aggregate principal amount of the trust debt securities will be
equal to the sum of the aggregate liquidation amount of the
preferred trust securities and common trust securities,
o the interest rate and interest and other payment dates of the trust
debt securities will match the distribution rate and distribution
and other payment dates for the preferred trust securities,
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o the Trust Agreement provides that we will pay for all and any costs,
expenses and liabilities of the Trust except the Trust's obligations
under its preferred trust securities and common trust securities,
and
o the Trust Agreement provides that the Trust will not engage in any
activity that is not consistent with its limited purposes.
If and to the extent that we do not make payments on the trust debt
securities, the Trust will not have funds available to make payments of
distributions or other amounts due on the preferred trust securities.
A principal difference between the rights of a holder of a preferred trust
security (which represents an undivided beneficial interest in the assets of the
Trust) and a holder of a trust debt security is that a holder of a trust debt
security will accrue, and (subject to the permissible extension of the interest
payment period) is entitled to receive, interest on the principal amount of
trust debt securities held, while a holder of preferred trust securities is
entitled to receive distributions only if and to the extent the Trust has funds
available for the payment of those distributions.
Upon any voluntary or involuntary dissolution or liquidation of the Trust
not involving a redemption or distribution of any trust debt security, after
satisfaction of liabilities to creditors of the Trust, the holders of the
preferred trust securities will be entitled to receive, out of assets held by
the Trust, the liquidation distribution in cash. See "Description of the
Preferred Trust Securities -- Liquidation Distribution upon Dissolution". Upon
our voluntary liquidation or bankruptcy, the Trust, as holder of the trust debt
securities, would be a creditor of ours, subordinated in the case of junior
subordinated trust debt securities, in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal, premium, if
any, and interest, before any of our stockholders receive payments or
distributions.
A default or event of default under any Senior Indebtedness would not
constitute an event of default with respect to junior subordinated trust debt
securities under the Trust Debt Indenture. However, in the event of payment
defaults under, or acceleration of, Senior Indebtedness, the subordination
provisions of the junior subordinated trust debt securities provide that no
payments may be made in respect of the junior subordinated trust debt securities
until the Senior Indebtedness has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on the
junior subordinated trust debt securities would constitute an event of default.
We and the Trust believe that the above mechanisms and obligations, taken
together, are the equivalent of a full and unconditional guarantee by us of
payments due in respect of the preferred trust securities.
DESCRIPTION OF THE CAPITAL STOCK
The following description summarizes the material terms of our capital
stock. Because this section is a summary, it does not describe every aspect of
our common stock. For additional information, you should refer to the applicable
provisions of the New Jersey Business Corporation Act and our Certificate of
Incorporation, as amended (the "Charter") and By-Laws. Our Charter and By-Laws
are exhibits to the registration statement of which this prospectus is a part.
Authorized Capital
Our authorized capital stock consists of 500,000,000 shares of common
stock, without par value, and 50,000,000 shares of preferred stock, without par
value.
Common Stock
General. As of March 31, 2002, 206,194,509 shares of our common stock were
issued and outstanding. The outstanding shares of our common stock are, and any
common stock offered hereby when issued and paid for will be, fully paid and
non-assessable.
Dividend Rights. Holders of our common stock are entitled to such
dividends as may be declared from time to time by our board of directors from
legally available funds after payment of all amounts owed on any preferred stock
that may be outstanding.
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Voting Rights. Holders of our common stock are entitled to one vote for
each share held by them on all matters presented to shareholders. In the
election of directors, shareholders have cumulative voting rights.
Liquidation Rights. After satisfaction of the preferential liquidation
rights of any preferred stock, the holders of our common stock are entitled to
share, ratably, in the distribution of all remaining net assets.
Preemptive Conversion or Redemption Rights. The holders of our common
stock have preemptive rights as to additional issues of our common stock not
issued on a competitive basis or by an offering to or through underwriters. The
shares of our common stock are not subject to redemption or to any further calls
or assessments and are not entitled to the benefit of any sinking fund
provisions.
Transfer Agents and Registrars
The co-transfer agents and co-registrars for our common and preferred
stock are the Shareholder Services Department of Services and the Continental
Stock Transfer and Trust Company.
Preferred Stock
Our board of directors is authorized, without further shareholder action,
to divide the preferred stock into one or more classes or series and to
determine the designations, preferences, limitations and special rights of any
class or series including, but not limited to, the following:
o the rate of dividend, if any;
o the rights, if any, of the holders of shares of the series upon our
voluntary or involuntary liquidation, dissolution or winding-up;
o the terms and conditions upon which shares may be converted into
shares of other series or other capital stock, if issued with the
privilege of conversion;
o the price at and the terms and conditions upon which shares may be
redeemed; and
o the voting rights, if any.
No shares of preferred stock have been issued.
DESCRIPTION OF THE STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts representing contracts obligating
holders to purchase from us, and us to sell to the holders, a specified number
of shares of our common stock (or a range of numbers of shares pursuant to a
predetermined formula) at a future date or dates. The price per share of our
common stock and number of shares of our common stock may be fixed at the time
the stock purchase contracts are issued or may be determined by reference to a
specific formula set forth in the stock purchase contracts.
The stock purchase contracts may be issued separately or as a part of
units, known as stock purchase units, consisting of (1) a stock purchase
contract or (2) a stock purchase contract and our debt securities, preferred
trust securities or debt obligations of third parties (including United States
Treasury securities), that would secure the holders' obligations to purchase our
common stock under the stock purchase contract. The stock purchase contracts may
require us to make periodic payments to the holders of the stock purchase units
or vice-versa. These payments may be unsecured or prefunded on some basis. The
stock purchase contracts may require holders to secure their obligations in a
specified manner and in certain circumstances we may deliver newly issued
prepaid stock purchase contracts, often known as prepaid securities, upon
release to a holder of any collateral securing the holder's obligations under
the original stock purchase contract.
The applicable prospectus supplement will describe the terms of any stock
purchase contracts or stock purchase units and, if applicable, debt securities
or preferred trust securities and will contain a discussion of the material
United States federal income tax considerations applicable to the stock purchase
contracts and stock purchase units. The description in the applicable prospectus
supplement will not contain all of the information you may find useful, and
reference will be made to the stock purchase contracts, and, if applicable,
collateral or depositary arrangements, relating to the stock purchase contracts
or stock purchase units.
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PLAN OF DISTRIBUTION
The Trust and we may sell the securities directly to purchasers or
indirectly through underwriters, dealers or agents. The names of any such
underwriters, dealers or agents will be set forth in the relevant prospectus
supplement. We may determine the price or other terms of the securities offered
under this prospectus by use of an electronic auction. We will describe how any
auction will determine the price or any other terms, how potential investors may
participate in the auction and the nature of the underwriters' obligations in
the related supplement to this prospectus. We will also set forth in the
relevant prospectus supplement:
o the terms of the offering of the securities;
o the proceeds we will receive from the offering;
o any underwriting discounts and other items constituting
underwriters' compensation;
o any initial public offering price;
o any discounts or concessions allowed or reallowed or paid to
dealers; and
o any securities exchanges on which we may list the securities.
The Trust and we may distribute the securities from time to time in one or
more transactions at:
o a fixed price;
o prices that may be changed;
o market prices at the time of sale;
o prices related to prevailing market prices; or
o negotiated prices.
We will describe the method of distribution in the relevant prospectus
supplement.
If we use underwriters with respect to an offering of the securities, we
will set forth in the relevant prospectus supplement:
o the name of the managing underwriter, if any;
o the name of any other underwriters; and
o the terms of the transaction, including any underwriting discounts
and other items constituting compensation of the underwriters and
dealers, if any.
The underwriters will acquire any securities for their own accounts and
they may resell the securities from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price and at
varying prices determined at the time of sale.
Any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time. We anticipate
that any underwriting agreement pertaining to any securities will:
o entitle the underwriters to indemnification by us against certain
civil liabilities, including liabilities under the Securities Act,
or to contribution with respect to payments that the underwriters
may be required to make related to any such civil liability;
o subject the obligations of the underwriters to certain conditions
precedent; and
o obligate the underwriters to purchase all securities offered in a
particular offering if any such securities are purchased.
If we use a dealer in an offering of the securities, we will sell such
securities to the dealer, as principal. The dealer may then resell the
securities to the public at varying prices to be determined by such dealer at
the time of resale. We will set forth the name of the dealer and the terms of
the transaction in the prospectus supplement.
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If we use an agent in an offering of the securities, we will name the
agent and describe the terms of the agency in the relevant prospectus
supplement. Unless we indicate otherwise in the prospectus supplement, we will
require an agent to act on a best efforts basis for the period of its
appointment.
Dealers and agents named in a prospectus supplement may be considered
underwriters of the securities described in the prospectus supplement under the
Securities Act. We may indemnify them against certain civil liabilities under
the Securities Act.
In the ordinary course of business, we may engage in transactions with
underwriters, dealers, agents and their affiliates and they may perform services
for us.
The Trust and we may solicit offers to purchase the securities and make
sales directly to institutional investors or others who may be considered
underwriters under the Securities Act with respect to such sales. We will
describe the terms of any such offer in the relevant prospectus supplement.
If we authorize underwriters or other agents to solicit offers to purchase
the securities from institutional investors pursuant to contracts providing for
payment and delivery at a future date, we will indicate that we are doing so in
the relevant prospectus supplement. We must approve all purchasers under such
contracts; the institutional investors may include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others.
We will not subject the obligations of such purchasers to any conditions
except that:
o we will not allow such purchases if they violate the laws of any
jurisdiction to which a proposed purchaser is subject; and
o if we are also selling the securities to underwriters, we will not
sell to the underwriters subject to delayed delivery.
Underwriters and other agents will not be responsible for the validity or
performance of such contracts providing for payment and delivery at a future
date.
We will set forth in the relevant prospectus supplement the anticipated
delivery date of the securities and the prospectus delivery obligations of
dealers.
Each series of securities will be a new issue and, except for the Common
Stock, which is listed on the New York Stock Exchange, will have no established
trading market. We may elect to list any series of new securities on an
exchange, or in the case of the Common Stock, on any additional exchange, but
unless we advise you differently in the prospectus supplement, we have no
obligation to cause any securities to be so listed. Any underwriters that
purchase securities for public offering and sale may make a market in the
securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. We make no assurance
as to the liquidity of, or the trading markets for, any securities.
LEGAL MATTERS
The validity of the securities, including the binding nature of debt
securities, to be issued by us will be passed upon for us by R. Edwin Selover,
Esquire, our Vice President and General Counsel or James T. Foran, Esquire, our
Associate General Counsel and/or such other counsel as is indicated in the
applicable prospectus supplement.
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 Richards, Layton & Finger, P.A., Wilmington,
Delaware, special Delaware counsel to the Trust. The validity of any offered
securities may be passed on for any underwriters, dealers or agents by Sidley
Austin Brown & Wood LLP, New York, New York, who may rely on the opinion of Mr.
Selover or Mr. Foran as to matters of New Jersey law.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from our Annual Report on Form 10-K
for the year ended December 31, 2001, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at the
Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1-800-SEC-0330. You may also obtain our filings on the
Internet at the SEC's home page at http://www.sec.gov. Our common stock is
listed on the New York Stock Exchange under the ticker symbol "PEG." You can
obtain information about us at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
This prospectus is part of a registration statement on Form S-3 filed with
the SEC under the Securities Act of 1933. It does not contain all of the
information that is important to you. You should read the registration statement
for further information with respect to the securities, the Trust and us.
Statements contained in this prospectus concerning the provisions of any
document filed as an exhibit to the registration statement or otherwise filed
with the SEC highlight selected information, and in each instance reference is
made to the copy of the full document as filed with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference or
deemed incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will be deemed to automatically
update and supersede this incorporated information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the termination of any particular offering of securities
hereunder.
o Our Annual Report on Form 10-K for the year ended December 31, 2001,
File No. 1-9120;
o Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2002, File No. 1-9120; and
o Our Current Reports on Form 8-K filed with the SEC on January 25,
2002, February 7, 2002 and April 16, 2002, File No. 1-9120.
You can get a free copy of any of the documents incorporated by reference
by making an oral or written request directed to:
J. Brian Smith
Director, Investor Relations
PSEG Services Corporation
80 Park Plaza, 6th Floor
Newark, NJ 07101
Telephone (973) 430-6564
You should rely only on the information contained or incorporated by
reference or deemed to be incorporated by reference in this prospectus or in a
related prospectus supplement. We have not authorized anyone else to provide you
with different or additional information. You should not rely on any other
information or representations. Our affairs may change after this prospectus and
any related prospectus supplement are distributed. You should not assume that
the information in this prospectus and any related prospectus supplement is
accurate as of any date other than the dates on the front of those documents.
You should read all information supplementing this prospectus.
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