As Filed with the Securities and Exchange Commission on December 2, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
KEYSPAN CORPORATION KEYSPAN GAS EAST CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK NEW YORK
(State of incorporation)
11-3431358 11-3434848
(I.R.S. employer identification number)
STEVEN L. ZELKOWITZ
175 EAST OLD COUNTRY ROAD, HICKSVILLE, NEW YORK 11801
ONE METROTECH CENTER, BROOKLYN, NEW YORK 11201
(516) 755-6650 (HICKSVILLE)
(718) 403-1000 (BROOKLYN)
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices and agent for service of
both registrants)
Copy to:
RAYMOND W. WAGNER
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<TABLE>
<CAPTION>
======================================================================================================
CALCULATION OF REGISTRATION FEE
======================================================================================================
PROPOSED
MAXIMUM PROPOSED
AGGREGATE MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT (1) OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities...................... $600,000,000 100% $600,000,000 $166,800
- ------------------------------------------------------------------------------------------------------
Guarantees of Debt Securities........-- (2) (2) (3)
======================================================================================================
Total................................ $600,000,000 100% $600,000,000 $166,800
======================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) No separate consideration will be received for the guarantees and the
Guarantor will not be paid any portion of the proceeds in respect of the
guarantees.
(3) Pursuant to Rule 457(n) under the Securities Act of 1933, no registration
fee is required with respect to the guarantees.
<PAGE>
Subject to Completion, Dated December 2, 1999
PROSPECTUS
KEYSPAN GAS EAST CORPORATION
$600,000,000
DEBT SECURITIES
Guaranteed Fully and Unconditionally by
KEYSPAN CORPORATION
The Issuer:
o KeySpan Gas East Corporation d/b/a Brooklyn Union of Long Island sells,
distributes and transports natural gas to approximately 467,000 customers in
Nassau and Suffolk Counties on Long Island and a portion of Queens County in
New York City. The Issuer is a wholly-owned subsidiary of KeySpan Corporation,
which is the guarantor of the debt securities.
The Guarantor:
o KeySpan Corporation d/b/a KeySpan Energy, with its subsidiaries, is the fourth
largest gas distribution company in the United States, with 1.6 million
customers in New York City and on Long Island. It also provides power,
electric transmission and distribution services and a broad range of related
services in the gas and electric power industries.
The Debt Securities and the Offering:
o By this prospectus, the Issuer may from time to time issue and offer up to
$600,000,000 of its debt securities.
oThe debt securities may be offered as separate series, in amounts, prices and
on terms to be determined at the time of the sale. When the Issuer offers debt
securities, it will provide you with a prospectus supplement or a term sheet
describing the terms of the specific issue of debt securities including the
offering price of the securities.
oThe Issuer may sell the debt securities to agents, underwriters or dealers, or
may sell them directly to other purchasers.
oYou should read this prospectus and the prospectus supplement or the term
sheet relating to the specific issue of debt securities carefully before you
invest.
The Guarantees:
o The payment of principal, premium, if any, and interest, if any, on the debt
securities will be guaranteed fully and unconditionally by KeySpan Corporation,
as Guarantor.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is December , 1999.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities in any state where the offer or sale is not permitted.
<PAGE>
TABLE OF CONTENTS
Page
About This Prospectus . . . . . . . . . . . . . . . . . . . . . . . . 6
Where You Can Find More Information . . . . . . . . . . . . . . . . . 6
Forward-looking Statements. . . . . . . . . . . . . . . . . . . . . . 7
The Issuer And The Guarantor . . . . . . . . . . . . . . . . . . . . 8
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Ratio of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . 10
Description of Securities . . . . . . . . . . . . . . . . . . . . . . 11
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 19
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
ABOUT THIS PROSPECTUS
As used in this prospectus and any prospectus supplement or term sheet,
except as the context otherwise requires, "Guarantor" means KeySpan Corporation,
"Issuer" means KeySpan Gas East Corporation and references to "we" "us" and
"our" mean KeySpan Corporation, together with its consolidated subsidiaries,
including KeySpan Gas East Corporation.
WHERE YOU CAN FIND MORE INFORMATION
The Guarantor files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any of these documents
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. The Guarantor's SEC filings are also available to
the public on the SEC's web site at http://www.sec.gov.
The Issuer and the Guarantor have filed a joint registration statement on
Form S-3 with the SEC covering the debt securities. For further information on
us and the debt securities, you should refer to the registration statement and
its exhibits. This prospectus summarizes material provisions of the indenture,
including the guarantees. Because the prospectus may not contain all the
information that you may find important, you should review the full text of
these documents. We have included copies of these documents in an exhibit to our
registration statement of which this prospectus is a part.
The SEC allows the Guarantor to "incorporate by reference" the information
the Guarantor files with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that the Guarantor files with the SEC will automatically update and
supersede this information. The Guarantor incorporates by reference the
documents listed below and any future filings made with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until the
Issuer sells all the debt securities.
o Annual Report on Form 10-K of KeySpan Corporation (formerly known as
MarketSpan Corporation) for the transition period from April 1, 1998 to
December 31, 1998;
o Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999;
o Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999;
o Quarterly Report on Form 10-Q for the quarterly period ended September 30,
1999;
o Current Reports on Form 8-K dated February 4, 1999, February 12, 1999,
March 31, 1999, May 20, 1999, June 22, 1999, September 16, 1999, November
5, 1999 and December 2, 1999.
You may request a copy of these filings, at no cost, over the Internet at
our web site at htpp://www.keyspanenergy.com or by writing or telephoning us at
the following address:
Investor Relations KeySpan Corporation One MetroTech Center Brooklyn, New York
11201 (718) 403-3265
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or term sheet. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other than the date on the front of these
documents.
<PAGE>
FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus, any prospectus
supplement or term sheet and the documents we have incorporated by reference
contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, as amended. Such statements relate to future
events or our future financial performance. We use words such as "anticipate",
"believe", "expect", "may", "project", "will" or other similar words to identify
forward-looking statements.
Without limiting the foregoing, all statements relating to our
o anticipated capital expenditures,
o future cash flows and borrowings,
o pursuit of potential future acquisition opportunities, and
o sources of funding
are forward-looking statements. These forward-looking statements are based on
numerous assumptions that we believe are reasonable, but they are open to a wide
range of uncertainties and business risks and actual results may differ
materially from those discussed in these statements.
Among the factors that could cause actual results to differ materially are:
o available sources and costs of fuel;
o federal and state regulatory initiatives that increase competition,
threaten cost and investment recovery and impact rate structure;
o our ability to successfully reduce our cost structures;
o the successful integration of our subsidiaries;
o the degree to which we develop unregulated business ventures;
o our ability to identify and make complementary acquisitions, as well
as the successful integration of those acquisitions;
o inflationary trends and interest rates; and
o our ability and our significant vendors' ability to modify computer
software, hardware and databases to accommodate the year 2000.
When considering these forward-looking statements, you should keep in mind
the cautionary statements in this document, any prospectus supplement or term
sheet and the documents incorporated by reference. We will not update these
statements unless the securities laws require us to do so.
<PAGE>
THE ISSUER AND THE GUARANTOR
THE ISSUER
The Issuer, KeySpan Gas East Corporation, does business under the name
Brooklyn Union of Long Island. It is a wholly owned subsidiary of KeySpan
Corporation, which does business under the name KeySpan Energy.
The Issuer conducts the gas distribution business formerly carried on by
the Long Island Lighting Company. It sells, distributes and transports natural
gas in a service territory of approximately 1,230 square miles in the Long
Island counties of Nassau and Suffolk and the Rockaway peninsula of Queens
County. It owns and operates gas distribution, transmission and storage systems
that consist of approximately 6,292 miles of distribution pipelines, 333 miles
of transmission pipelines and a gas storage facility. The Issuer serves
approximately 467,000 customers, of which approximately 418,000, or 90%, are
residential.
The Issuer offers gas for sale to residential customers on a "firm" basis,
and to commercial and industrial customers on a "firm" or "interruptible" basis.
The Issuer offers "firm" service to customers under rate schedules or contracts
that anticipate no interruptions. It offers "interruptible" service to customers
under rate schedules or contracts that anticipate and permit interruption on
short notice, generally in peak-load seasons. Gas is available at any time of
the year on an interruptible basis, if the supply is sufficient and the supply
system is adequate.
The Issuer also participates in the interstate markets by releasing
pipeline capacity or bundling pipeline capacity with gas for "off-system" sales.
An "off-system" customer consumes gas at facilities located outside the Issuer's
service territory, by connecting to the Issuer's facilities or one of its
transporter's facilities, at a point of delivery agreed to by the Issuer and the
customer.
The Issuer purchases its natural gas for sale to its customers under
long-term supply contracts and short-term spot contracts. This gas is
transported under both firm and interruptible transportation contracts. In
addition, the Issuer has commitments from third parties for the provision of gas
storage capability and peaking supplies.
The Issuer was incorporated in 1998 when all of the assets used in the gas
distribution business formerly owned by the Long Island Lighting Company were
transferred to it. The principal address of the Issuer is 175 East Old Country
Road, Hicksville, New York, 11801.
THE GUARANTOR
The Guarantor, KeySpan, was formed in connection with a business
combination in May 1998 of KeySpan Energy Corporation, the parent of The
Brooklyn Union Gas Company, and certain businesses of the Long Island Lighting
Company. Our core business is gas distribution, conducted by our two
subsidiaries, Brooklyn Union of New York and the Issuer, which together
distribute gas to approximately 1.6 million customers.
We are also a major, and growing, generator of electricity. We own and
operate five large generating plants and 42 smaller facilities in Nassau and
Suffolk Counties on Long Island and a major facility in Queens County in New
York City. Under contractual arrangements, we provide power, electric
transmission-and-distribution services, billing and other customer services for
approximately one million electric customers of the Long Island Power Authority.
Our other subsidiaries are involved in gas storage, wholesale and retail gas and
electric marketing, appliance service, and large energy-system ownership,
installation and management. We also invest in, and participate in the
development of, pipelines and other energy projects, domestically and
internationally.
In November 1999, the Guarantor and Eastern Enterprises ("Eastern")
announced that they had signed a definitive merger agreement under which we will
acquire all of the common stock of Eastern for $64.00 per share in cash. The
transaction has a total value of approximately $2.5 billion ($1.7 billion in
equity and $0.8 billion in assumed debt and preferred stock). The Guarantor
expects to raise $1.7 billion of initial financing for the transaction in
short-term markets which will ultimately be replaced with long-term financing.
The transaction will be accounted for as a purchase.
<PAGE>
Eastern owns and operates Boston Gas Company, Colonial Gas Company, Essex
Gas Company, Midland Enterprises Inc., Transgas Inc. and ServicEdge Partners,
Inc. The following table shows Eastern's revenues, operating earnings and net
earnings for the years 1996 through 1998 and the nine months ended September 30,
1998 and 1999:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------ -------------
1996 1997 1998 1998 1999(1)
---- ---- ---- ---- -------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues $1,057,271 $1,023,740 $935,264 $677,228 $660,327
Operating earnings $ 130,234 $ 115,317 $100,405 $ 62,902 $ 54,813
Net earnings $ 64,501 $ 55,916 $105,981(2) $86,348(2) $ 26,905
</TABLE>
(1) Eastern acquired Colonial Gas Company on August 31, 1999 in a transaction
accounted for as a purchase.
(2) Includes reversal of reserves resulting in an extraordinary gain of $48.4
million on an after-tax basis.
At September 30, 1999, Eastern had total assets of $1.9 billion, long-term debt
and preferred stock of $0.5 billion and shareholders' equity of $0.7 billion.
In July 1999, Eastern announced it had entered into an agreement to acquire
EnergyNorth Inc., owner of New Hampshire's largest natural gas distributor.
EnergyNorth is located across the border from, but contiguous to, areas served
by Eastern's gas distribution subsidiaries. In connection with our acquisition
of Eastern, Eastern has amended its agreement with EnergyNorth to provide for an
all cash acquisition of EnergyNorth shares at a price per share of $61.13. The
restructured EnergyNorth merger is expected to close contemporaneously with the
KeySpan/Eastern transaction.
The merger of KeySpan and Eastern is conditioned, among other things, upon
the approval of Eastern's shareholders, the SEC and the New Hampshire Public
Utility Commission. We anticipate that the transaction can be completed in 9 to
12 months but we are unable to determine when or if all of the required
approvals will be obtained.
The increased size and scope of the combined organization should enable the
combined company to provide enhanced, cost-effective customer service and to
capitalize on the above-average growth opportunities for natural gas in the
Northeast and provide additional resources to our unregulated businesses. The
combined company will serve approximately 2.4 million customers.
<PAGE>
USE OF PROCEEDS
The Issuer plans to use the proceeds of the offering for the construction
of utility plants, for reimbursement of the Issuer's treasury, and for any other
proper corporate purposes, including satisfaction of outstanding obligations or
investment in short-term securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows our consolidated ratio of earnings to fixed
charges for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEARS ENDED ENDED ENDED
- -------------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997 1998 1998 1999
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<S> <C> <C> <C> <C>
2.06 2.15 2.21 2.44 (a) 3.31
</TABLE>
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(a) For the nine months ended December 31, 1998, earnings were insufficient to
cover fixed charges by $365.0 million. During the nine months ended
December 31, 1998, the Company incurred the following special charges
(after tax): charges associated with the transaction with the Long Island
Power Authority of $107.9 million; charges associated with the merger with
KeySpan Energy of $83.5 million; an impairment charge of $54.1 million to
write-down the value of proved gas reserves; and a charge of $13.0 million
to establish a not-for-profit philanthropic foundation.
<PAGE>
DESCRIPTION OF SECURITIES
The debt securities and the guarantees will be issued under an indenture,
dated as of December 1, 1999, among the Issuer, the Guarantor and The Chase
Manhattan Bank, as trustee. The indenture provides for the issuance from time to
time of debt securities in an unlimited dollar amount and an unlimited number of
series. The debt securities will be guaranteed by the Guarantor under the
guarantees described below.
The following description of the terms of the debt securities and the
guarantees summarizes the material terms that will apply to the debt securities
and the guarantees. The description is not complete, and we refer you to the
indenture, a copy of which is an exhibit to the registration statement of which
this prospectus is a part. For your reference, in several cases below we have
noted the section in the indenture that the paragraph summarizes. Capitalized
terms have the meanings assigned to them in the indenture. The referenced
sections of the indenture and the definitions of capitalized terms are
incorporated by reference in the following summary.
Prospective purchasers of debt securities should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to
instruments such as the debt securities. The prospectus supplement or term sheet
relating to an issue of debt securities will describe these considerations, if
they apply.
DESCRIPTION OF DEBT SECURITIES
SPECIFIC TERMS OF EACH SERIES
Each time that the Issuer issues a new series of debt securities, the
prospectus supplement or term sheet relating to that new series will specify the
particular amount, price and other terms of those debt securities. These terms
may include:
o the title of the debt securities;
o any limit on the total principal amount of the debt securities;
o the date or dates on which the principal of the debt securities will
be payable or their manner of determination;
o the interest rate or rates of the debt securities; the date or dates
from which interest will accrue on the debt securities; and the
interest payment dates and the regular record dates for the debt
securities; or, in each case, their manner of determination;
o the place or places where the principal of and premium and interest on
the debt securities will be paid;
o the period or periods within which, the price or prices at which and
the terms on which any of the debt securities may be redeemed, in
whole or in part at our option, and any remarketing arrangements;
o the terms on which the Issuer would be required to redeem or purchase
debt securities required by any sinking fund, mandatory redemption or
similar provision; and the period or periods within which, the price
or prices at which and the terms and conditions on which the debt
securities will be so redeemed or purchased in whole or in part;
o the denomination in which the debt securities will be issued, if other
than denominations of $1,000 and any whole multiple thereof;
o the portion of the principal amount of the debt securities that is
payable on the declaration of acceleration of the maturity, if other
than their principal amount; these debt securities are referred to as
"OID debt securities" and are described below;
o whether and under what circumstances the Issuer or the Guarantor will
pay additional amounts under any debt securities held by a person who
is not a U.S. person for tax payments, assessments or other
governmental charges and whether the Issuer or the Guarantor has the
option to redeem the debt securities which are affected by the
additional amounts instead of paying the additional amounts;
o the form in which the Issuer will issue the debt securities, whether
registered, bearer or both, and any restrictions on the exchange of
one form of debt securities for another and on the offer, sale and
delivery of the debt securities in either form;
o whether the debt securities will be issuable as global securities;
o whether the amounts of payments of principal of, premium, if any, and
interest, if any, on the debt securities are to be determined with
reference to an index, formula or other method, and if so, the manner
in which such amounts will be determined;
o if the debt securities are issuable in definitive form upon the
satisfaction of certain conditions, the form and terms of such
conditions;
o any trustees, paying agents, transfer agents, registrars, depositories
or similar agents with respect to the debt securities;
o any additions or deletions to the terms of the debt securities with
respect to the events of default or covenants governing the debt
securities;
o the foreign currency or units of two or more foreign currencies in
which payment of the principal of and premium and interest on any debt
securities will be made, if other than U.S. dollars, and holders'
right to elect payment in a foreign currency or foreign currency unit
other than that in which the debt securities are payable;
o whether and to what extent the debt securities are subject to
defeasance on terms different from those described under "Defeasance
of indenture"; and
o any other terms of the debt securities that are not inconsistent with
the indenture.
(section 301)
The Issuer may issue debt securities as original issue discount ("OID")
debt securities. OID debt securities bear no interest or bear interest at
below-market rates and are sold at a discount below their stated principal
amount. If the Issuer issues OID debt securities, the prospectus supplement or
term sheet will contain the issue price, the rate at which interest will
accrete, and the date from which such interest will accrete on the OID debt
securities.
RANKING
The debt securities will be unsecured and unsubordinated obligations of the
Issuer and will rank equally with all the Issuer's other unsecured and
unsubordinated debt. The guarantees will be unsecured and unsubordinated
obligations of the Guarantor and will rank equally with all the Guarantor's
other unsecured and unsubordinated debt.
FORM AND DENOMINATION
The prospectus supplement or term sheet will describe the form which the
debt securities and the guarantees will have, including insertions, omissions,
substitutions and other variations permitted by the indenture and any legends
required by any laws, rules or regulations. (section 201)
The Issuer will issue debt securities in denominations of $1,000 and whole
multiples thereof, unless the prospectus supplement or term sheet states
otherwise. (section 302)
PAYMENT
The Issuer will pay principal of and premium and interest on its registered
debt securities at the place and time described in the debt securities. The
Issuer will pay installments of interest on any registered debt security to the
person in whose name the registered debt security is registered at the close of
business on the regular record date for these payments. The Issuer will pay
principal and premium on registered debt securities only against surrender of
these debt securities. (section 1001). If the Issuer issues debt securities in
bearer form, the prospectus supplement or term sheet will describe where and how
payment will be made.
MATERIAL COVENANTS
The indenture includes the following material covenants:
LIEN ON ASSETS
If the Issuer mortgages, pledges or otherwise subjects to any lien the
whole or any part of any property or assets which it now owns or acquires in the
future, then the Issuer will secure the debt securities to the same extent and
in the same proportion as the debt or other obligation that is secured by that
mortgage, pledge or other lien. The debt securities will remain secured for the
same period as the other debt remains secured. This restriction does not apply,
however, to any of the following:
o purchase-money mortgages or liens;
o liens on any property or asset that existed at the time when the
Issuer acquired that property or asset;
o any deposit or pledge to secure public or statutory obligations;
o any deposit or pledge with any governmental agency required to qualify
the Issuer to conduct its business, or any part of its business, or to
entitle it to maintain self-insurance or to obtain the benefits of any
law relating to workmen's compensation, unemployment insurance, old
age pensions or other social security;
o any deposit or pledge with any court, board, commission or
governmental agency as security related to the proper conduct of any
proceeding before it;
o any mortgage, pledge or lien on any property or asset of any of the
Issuer's affiliates, even if the affiliate may have acquired that
property or asset from the Issuer;
o liens for taxes, assessments or governmental charges or levies not yet
delinquent or being contested in good faith by the Issuer, if the
Issuer has made appropriate reserves;
o liens of landlords and liens of mechanics and materialmen incurred in
the ordinary course of business for sums not yet due or being
contested in good faith by the Issuer, if the Issuer has made
appropriate reserves;
o leases or subleases which the Issuer has granted to others in the
ordinary course of business;
o easements, rights-of-way, restrictions and other similar encumbrances
which the Issuer has incurred in the ordinary course of business and
which do not interfere with the ordinary conduct of the Issuer's
business;
o liens incurred in connection with the issuance by a state or a
political subdivision of a state of any securities the interest on
which is exempt from federal income taxes under Section 103 of the
Internal Revenue Code or any other laws or regulations in effect at
the time of the issuance; or
o liens for the sole purpose of extending, renewing or replacing all or
a part of the indebtedness secured by any lien referred to in the
foregoing clauses or in this clause.
(section 1007)
LIMITATION ON MERGER, CONSOLIDATION AND SALES OF ASSETS
Neither the Issuer nor the Guarantor may consolidate with or merge into any
other entity or transfer or lease substantially all of its properties and assets
to any person unless:
o the successor is organized under the laws of the United States or a
state thereof;
o the successor assumes by supplemental indenture the obligations of its
predecessor (that is, all the Issuer's obligations under the debt
securities and the indenture or all the Guarantor's obligations under
the guarantees and the indenture); and
o after giving effect to the transaction, there is no default under the
indenture.
The surviving transferee or lessee corporation will be the Issuer's or the
Guarantor's successor, and the Issuer will be relieved of all obligations under
the debt securities and the indenture or the Guarantor will be relieved of all
obligations under the guarantees and the indenture. (section 801)
REGISTRATION OF TRANSFER AND EXCHANGE
All debt securities issued upon any registration of transfer or exchange of
debt securities will be valid obligations of the Issuer, evidencing the same
debt and entitled to the same rights under the indenture and the guarantees as
the debt securities surrendered in the registration of transfer or exchange.
REGISTRATION OF TRANSFER
Holders of registered debt securities may present their securities for
registration of transfer at the office of one or more security registrars
designated and maintained by the Issuer. (section 305)
The Issuer will not be required to register the transfer
of or exchange debt securities under the following conditions:
o The Issuer will not be required to register the transfer of or
exchange any debt securities during a period of 15 days before any
selection of those debt securities to be redeemed.
o The Issuer will not be required to register the transfer of or
exchange any debt securities selected for redemption, in whole or in
part, except the unredeemed portion of any debt securities being
redeemed in part.
o The Issuer will not be required to register the transfer of or
exchange debt securities of any holder who has exercised an option to
require the repurchase of those debt securities prior to their stated
maturity date, except the portion not being repurchased.
(section 305)
EXCHANGE
At your option, you may exchange your registered debt securities of any
series (except a global security, as set forth below) for an equal principal
amount of other registered debt securities of the same series having authorized
denominations upon surrender to the designated agency of the Issuer.
The Issuer may at any time exchange debt securities issued as one or more
global securities for an equal principal amount of debt securities of the same
series in definitive registered form. In this case the Issuer will deliver to
the holders new debt securities in definitive registered form in the same
aggregate principal amount as the global securities being exchanged.
The depositary of the global securities may also decide at any time to
surrender one or more global securities in exchange for debt securities of the
same series in definitive registered form, in which case the Issuer will deliver
the new debt securities in definitive form to the persons specified by the
depositary, in an aggregate principal amount equal to, and in exchange for, each
person's beneficial interest in the global securities. (section 305)
Notwithstanding the above, the Issuer will not be required to exchange any
debt securities if, as a result of the exchange, the Issuer would suffer adverse
consequences under any United States law or regulation. (section 305)
GLOBAL SECURITIES
If the Issuer decides to issue debt securities in the form of one or more
global securities, then the Issuer will register the global securities in the
name of the depositary for the global securities or the nominee of the
depositary and the global securities will be delivered by the trustee to the
depositary for credit to the accounts of the holders of beneficial interests in
the debt securities.
The prospectus supplement or term sheet will describe the specific terms of
the depositary arrangement for debt securities of a series that are issued in
global form. None of the Issuer, the trustee, any paying agent or the security
registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a global debt security or for maintaining, supervising or reviewing
any records relating to these beneficial ownership interests.
DEFEASANCE OF INDENTURE
The Issuer and the Guarantor can terminate all of their
obligations under the Indenture with respect to the debt securities and the
guarantees, other than the obligation to pay interest on and the principal of
the debt securities and certain other obligations, at any time by:
o depositing money or U.S. government obligations with the trustee in an
amount sufficient to pay the principal of and interest on the debt
securities to their maturity; and
o complying with certain other conditions, including delivery to the trustee
of an opinion of counsel or a ruling received from the Internal Revenue
Service to the effect that holders of debt securities will not recognize
income, gain or loss for federal income tax purposes as a result of the
Issuer's and the Guarantor's defeasance.
In addition, the Issuer and the Guarantor can terminate all of their
obligations under the Indenture with respect to the debt securities and the
guarantees, including the obligation to pay interest on and the principal of the
debt securities, at any time by:
o depositing money or U.S. government obligations with the trustee in an
amount sufficient to pay the principal of and interest on the debt
securities to their maturity, and
o complying with certain other conditions, including delivery to the trustee
of an opinion of counsel or a ruling received from the Internal Revenue
Service, to the effect that holders of debt securities will not recognize
income, gain or loss for federal income tax purposes as a result of the
Issuer's and the Guarantor's defeasance, if the opinion of counsel is based
upon a change in the federal tax law since the date of the indenture.
(sections 402-403)
PAYMENTS OF UNCLAIMED MONEYS
Moneys deposited with the trustee or any paying agent for the payment of
principal of or premium and interest on any debt security that remain unclaimed
for two years will be repaid to the Issuer at the Issuer's request, unless the
law requires otherwise. If this happens and you want to claim these moneys, you
must look to the Issuer and not to the trustee or paying agent. (section 409)
EVENTS OF DEFAULT, NOTICES, AND WAIVER
EVENTS OF DEFAULT
An "event of default" regarding any series of debt securities is any one of
the following events:
o default for 30 days in the payment of any interest installment when
due and payable;
o default in the payment of principal or premium when due at its stated
maturity, by declaration, when called for redemption or otherwise;
o default in the performance of any covenant in the debt securities or
in the indenture by the Issuer or the Guarantor for 60 days after
notice to the Issuer and the Guarantor by the trustee or by holders of
25% in principal amount of the outstanding debt securities of that
series;
o acceleration of debt securities of another series or any other
indebtedness for borrowed money of the Issuer or the Guarantor, in an
aggregate principal amount exceeding $10.0 million under the terms of
the instrument or instruments under which the indebtedness is issued
or secured, if the acceleration is not annulled within 30 days after
written notice as provided in the indenture;
o certain events of bankruptcy, insolvency and reorganization of the
Issuer or the Guarantor; and
o any other event of default of that series that is specified in the
prospectus supplement or term sheet.
(section 501)
A default regarding a single series of debt securities will not necessarily
constitute a default regarding any other series.
If an event of default for any series of debt securities occurs and is
continuing (other than an event of default involving the bankruptcy, insolvency
or reorganization of the Issuer or Guarantor), either the trustee or the holders
of 25% in principal amount of the outstanding debt securities of that series may
declare the principal (or, in the case of OID securities, a lesser amount as
provided in those OID securities) of all the debt securities of that series,
together with any accrued interest on the debt securities, to be immediately due
and payable by notice in writing to the Issuer and the Guarantor. If it is the
holders of debt securities who give notice of that declaration of acceleration
to the Issuer and the Guarantor, then they must also give notice to the trustee.
(section 502)
If an event of default occurs which involves the bankruptcy, insolvency or
reorganization of the Issuer or the Guarantor, as set forth above, then all
unpaid principal amounts (or, if the debt securities are OID securities, then
the portion of the principal amount that is specified in those OID securities)
and accrued interest on all debt securities of each series will immediately
become due and payable, without any action by the trustee or any holder of debt
securities. (section 502)
In order for holders of debt securities to initiate proceedings for a
remedy under the indenture, 25% in principal amount must first give notice to
the Issuer and the Guarantor as provided above, must request that the trustee
initiate a proceeding in its own name and must offer the trustee a reasonable
indemnity against costs and liabilities. If the trustee still refuses for 60
days to initiate the proceeding, and no inconsistent direction has been given to
the trustee by holders of a majority of the debt securities of the same series,
the holders may initiate a proceeding as long as they do not adversely affect
the rights of any other holders of that series. (section 507)
The holders of a majority in principal amount of the outstanding debt
securities of a series may rescind a declaration of acceleration if all events
of default, besides the failure to pay principal or interest due solely because
of the declaration of acceleration, have been cured or waived. (section 502)
If the Issuer or the Guarantor defaults on the payment of any installment
of interest and fails to cure the default within 30 days, or if the Issuer or
the Guarantor defaults on the payment of principal when it becomes due, then the
trustee may require the Issuer or the Guarantor to pay all amounts due to the
trustee, with interest on the overdue principal or interest payments, in
addition to the expenses of collection. (section 503)
A judgment for money damages by courts in the United States, including a
money judgment based on an obligation expressed in a foreign currency, will
ordinarily be rendered only in U.S. dollars. New York statutory law provides
that a court shall render a judgment or decree in the foreign currency of the
underlying obligation and that the judgment or decree shall be converted into
U.S. dollars at the exchange rate prevailing on the date of entry of the
judgment or decree. The indenture requires the Issuer to pay additional amounts
necessary to protect holders if a court requires a conversion to be made on a
date other than a judgment date.
NOTICES
The trustee is required to give notice to holders of a series of debt
securities of a default, which remains uncured or has not been waived, that is
known to the trustee within 90 days after the default has occurred. In the event
of a default in the performance of any covenant in the debt securities or the
indenture which results under the indenture in notice to the Issuer and the
Guarantor by the trustee after 90 days, the trustee shall not give notice to the
holders of debt securities until 60 days after the giving of notice to the
Issuer and the Guarantor. The trustee may not withhold the notice in the case of
a default in the payment of principal of and premium or interest on any of the
debt securities. (section 602)
WAIVER
The holders of a majority in principal amount of the outstanding debt
securities of a series may waive any past default or event of default except a
default in the payment of principal of or premium or interest on the debt
securities of that series or a default relating to a provision that cannot be
amended without the consent of each affected holder. (section 513)
REPORTS
The Issuer and the Guarantor are each required to file every year with the
trustee an officer's certificate confirming that it is complying with all
conditions and covenants in the indenture. (section 1005)
The Issuer and the Guarantor must each file with the trustee copies of the
annual reports and of the information and other documents which the Issuer and
the Guarantor may be required to file with the SEC under Section 13 or Section
15(d) of the Securities and Exchange Act of 1934, as amended. These documents
must be filed with the trustee within 15 days after they are required to be
filed with the SEC. If either the Issuer or the Guarantor is not required to
file the information, documents or reports under either of these Sections, then
the Issuer or the Guarantor must file with the trustee and the SEC, in
accordance with the rules and regulations of the SEC, the supplementary and
periodic information, documents and reports which may be required by Section 13
of the Exchange Act, in respect of a debt security listed and registered on a
national securities exchange, as may be required by the rules and regulations of
the SEC.
Within 30 days of filing the information, documents or reports referred to
above with the trustee, the Issuer and the Guarantor must mail to the holders of
the debt securities any summaries of the information, documents or reports which
are required to be sent to the holders by the rules and regulations of the SEC.
(section 704)
RIGHTS AND DUTIES OF THE TRUSTEE
The holders of a majority in principal amount of outstanding debt
securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
other power conferred on the trustee. The trustee may decline to follow that
direction if it would involve the trustee in personal liability or would be
illegal. (section 512) During a default, the trustee is required to exercise the
standard of care and skill that a prudent man would exercise under the
circumstances in the conduct of his own affairs. (section 601) The trustee is
not obligated to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders of debt securities unless those
holders have offered to the trustee reasonable security or indemnity. (section
603)
The trustee is entitled, in the absence of bad faith on its part, to rely
on an officer's certificate of the Issuer or the Guarantor before taking action
under the indenture. (section 603)
SUPPLEMENTAL INDENTURES
SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF HOLDERS
Without the consent of any holders of debt securities, the Issuer, the
Guarantor and the trustee may supplement the indenture, among other things, to:
o pledge property to the trustee as security for the debt securities;
o reflect that another entity has succeeded the Issuer or the Guarantor
and assumed the covenants and obligations of the Issuer under the debt
securities and the indenture or of the Guarantor under the guarantees
and the indenture;
o cure any ambiguity or inconsistency in the indenture or in the debt
securities or the guarantees or make any other provisions the Issuer
and the Guarantor consider necessary or desirable, as long as the
interests of the holders of the debt securities are not adversely
affected in any material respect;
o issue and establish the form and terms of any series of debt
securities or the guarantees as provided in the indenture;
o add to the covenants of the Issuer or the Guarantor further covenants
for the benefit of the holders of debt securities (and if the
covenants are for the benefit of less than all series of debt
securities, stating which series are entitled to benefit);
o add any additional event of default (and if the new event of default
applies to fewer than all series of debt securities, stating to which
series it applies);
o change the trustee or provide for an additional trustee;
o provide additional provisions for bearer debt securities so long as
the action does not adversely affect the interests of holders of any
debt securities in any material respect; or
o modify the indenture in order to continue its qualification under the
Trust Indenture Act of 1939 or as may be necessary or desirable in
accordance with amendments to that Act.
(section 901)
SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF HOLDERS
With the consent of the holders of at least a majority in principal amount
of the series of the debt securities that would be affected by a modification of
the indenture, the indenture permits the Issuer, the Guarantor and the trustee
to supplement the indenture or modify in any way the terms of the indenture or
the rights of the holders of the debt securities. However, without the consent
of each holder of all of the debt securities affected by that modification, the
Issuer, the Guarantor and trustee may not:
o reduce the principal of or premium on or change the stated final
maturity of any debt security;
o reduce the rate of or change the time for payment of interest on any
debt security (or, in the case of OID securities, reduce the rate of
accretion of the OID);
o change any obligation of the Issuer or the Guarantor to pay additional
amounts under the indenture;
o reduce or alter the method of computation of any amount payable upon
redemption, repayment or purchase of any debt security by the Issuer
or the Guarantor (or the time when the redemption, repayment or
purchase may be made);
o make the principal or interest on any debt security payable in a
currency other than that stated in the debt security or change the
place of payment;
o reduce the amount of principal due on an OID security upon
acceleration of maturity or provable in bankruptcy;
o impair any right of repayment or purchase at the option of any holder
of debt securities;
o modify the right of any holder of debt securities to receive or sue
for payment of the principal or interest on a debt security that would
be due and payable at the maturity thereof or upon redemption;
o modify the Guarantor's obligation under the guarantees to pay all
amounts due under the debt securities in any way adverse to the
interest of any holders of debt securities; or
o reduce the principal amount of the outstanding debt securities of any
series required to supplement the indenture or to waive any of its
provisions.
(section 902)
A supplemental indenture which modifies or eliminates a provision intended
to benefit the holders of one series of debt securities will not affect the
rights under the indenture of holders of other series of debt securities.
REDEMPTION
The specific terms of any redemption of a series of debt securities will be
contained in the prospectus supplement or term sheet for that series. Generally,
the Issuer must send notice of redemption to the holders at least 30 days but
not more than 60 days prior to the redemption date. The notice will specify:
o the principal amount being redeemed;
o the redemption date;
o the redemption price;
o the place or places of payment;
o the CUSIP number of the debt securities being redeemed;
o whether the redemption is pursuant to a sinking fund;
o that on the redemption date, interest (or, in the case of OID
securities, original issue discount) will cease to accrue; and
o if bearer debt securities are being redeemed, that those bearer debt
securities must be accompanied by all coupons maturing after the
redemption date or the amount of the missing coupons will be deducted
from the redemption price, or indemnity must be furnished, and whether
those bearer debt securities may be exchanged for registered debt
securities not being redeemed.
(section 1104)
On or before any redemption date, the Issuer or the Guarantor will deposit
an amount of money with the trustee or with a paying agent sufficient to pay the
redemption price. (section 1103)
If less than all the debt securities are being redeemed, the trustee shall
select the debt securities to be redeemed using a method it considers fair.
(section 1103) After the redemption date, holders of debt securities which were
redeemed will have no rights with respect to the debt securities except the
right to receive the redemption price and any unpaid interest to the redemption
date. (section 1106)
DESCRIPTION OF THE GUARANTEES
The Guarantor has unconditionally guaranteed to each holder of debt
securities and to the trustee and its successors the due and punctual payment of
the principal of and premium, if any, and interest, if any, on the debt
securities. The guarantees apply whether the payment is due at the maturity date
of the debt securities, on an interest payment date, or as a result of
acceleration, an offer to purchase or otherwise. The guarantees include payment
of interest on the overdue principal of and interest, if any, on the debt
securities (if lawful) and all other obligations of the Issuer under the
indenture.
The guarantees will remain valid even if the indenture is found to be
invalid. The Guarantor is obligated under the guarantees to pay any guaranteed
amount immediately after the Issuer's failure to do so.
Since the Guarantor is a holding company, the right of the Guarantor to
participate in any distribution of the assets of any of the Guarantor's
subsidiaries upon liquidation, reorganization or otherwise is subject to the
prior claims of the creditors of each of the subsidiaries (except to the extent
that the claims of the Guarantor itself as a creditor of a subsidiary may be
recognized). Since this is true for the Guarantor, it is also true for the
creditors of the Guarantor (including the holders of the debt securities). The
right of the Guarantor's creditors (including the holders of the debt
securities) to participate in the distribution of the stock owned by the
Guarantor in its regulated subsidiaries would also be subject to approval by the
regulatory commissions having jurisdiction over those subsidiaries (including
the Federal Energy Regulatory Commission).
CONCERNING THE TRUSTEE
We have customary banking relationships with The Chase Manhattan Bank.
Among other services, Chase provides us with cash management and credit
services, including payroll account, lockbox, foreign exchange and investment
custody account services. The Chase Manhattan Bank also serves or has served as
administrative agent and trustee with respect to several other loans and
issuances of debt of the Guarantor or its subsidiaries. In addition, Chase
Securities, Inc., an affiliate of The Chase Manhattan Bank, acted as issuing and
paying agent for a commercial paper program which the guarantor completed in
November 1999.
GOVERNING LAW
The laws of the State of New York govern the indenture and will govern the
debt securities and the guarantees. (section 112)
<PAGE>
PLAN OF DISTRIBUTION
The Issuer may sell the debt securities in any of three ways:
o through underwriters or dealers;
o through agents; or
o directly to purchasers.
The prospectus supplement or term sheet for each series of debt securities
will describe that offering, including:
o the name or names of any underwriters, dealers or agents;
o the purchase price and the proceeds to the Issuer from that sale;
o any underwriting discounts and other items constituting
underwriters' compensation;
o any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers; and
o any securities exchanges on which the debt securities of that
series may be listed.
UNDERWRITERS
If underwriters are used in the sale, we will execute an underwriting
agreement with those underwriters. Unless otherwise set forth in the prospectus
supplement or term sheet, the obligations of the underwriters to purchase debt
securities will be subject to certain conditions. The underwriters will be
obligated to purchase all the debt securities of a series if any are purchased.
The debt securities will be acquired by the underwriters for their own
account and may be resold by them from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Underwriters may be deemed to
have received compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from the purchasers of debt
securities for whom they may act as agent. Underwriters may also sell debt
securities to or through dealers. These dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The Issuer may authorize underwriters to solicit offers by certain types of
institutions to purchase debt securities from us at the public offering price
stated in the prospectus supplement or term sheet required by delayed delivery
contracts providing for payment and delivery on a specified date in the future.
If the Issuer sells debt securities under these delayed delivery contracts, the
prospectus supplement or term sheet will state that as well as the conditions to
which these delayed delivery contracts will be subject and the commissions
payable for that solicitation.
AGENTS
The Issuer may also sell debt securities through agents designated by us
from time to time. We will name any agents involved in the offer or sale of the
debt securities and will list commissions payable by the Issuer to these agents
in the prospectus supplement or term sheet. These agents will be acting on a
best efforts basis to solicit purchases for the period of their appointment,
unless we state otherwise in the prospectus supplement or term sheet.
DIRECT SALES
The Issuer may sell debt securities directly to purchasers. In this case,
the Issuer will not engage underwriters or agents in the offer and sale of debt
securities.
REMARKETING TRANSACTIONS
The Issuer may also sell debt securities that we have purchased, redeemed
or repaid through one or more remarketing firms acting as principals for their
own accounts or as our agents. The applicable prospectus supplement or term
sheet will identify any remarketing firms and describe the terms of our
agreement with them and their compensation. Remarketing firms may be deemed to
be underwriters of the debt securities under the Securities Act of 1933, as
amended.
INDEMNIFICATION
We may indemnify underwriters, dealers or agents who participate in the
distribution of debt securities against certain liabilities, including
liabilities under the Securities Act, and agree to contribute to payments which
these underwriters, dealers or agents may be required to make.
NO ASSURANCE OF LIQUIDITY
Each series of debt securities will be a new issue of securities with no
established trading market. Any underwriters that purchase debt securities from
the Issuer may make a market in these debt securities. The underwriters will not
be obligated, however, to make a market in the debt securities and may
discontinue market-making at any time without notice to holders of debt
securities. We cannot assure you that there will be liquidity in the trading
market for any debt securities of any series.
LEGAL OPINIONS
The validity of the debt securities offered by the Issuer and the
guarantees offered by the Guarantor in this prospectus will be passed upon for
the Issuer and the Guarantor by Steven L. Zelkowitz, Senior Vice President and
Deputy General Counsel of KeySpan Corporation. Mr. Zelkowitz has been granted
options to purchase up to 146,000 shares of common stock of the Guarantor.
Certain legal matters will be passed upon for any agents or underwriters by
Simpson Thacher & Bartlett, New York, New York, or other counsel identified in
the prospectus supplement or term sheet. Simpson Thacher & Bartlett also acts as
counsel for us from time to time.
EXPERTS
Arthur Andersen, LLP, independent accountants, audited certain financial
statements for the nine months ended December 31, 1998 and related schedules
incorporated by reference in this prospectus and elsewhere in the registration
statement. These documents are incorporated by reference herein in reliance upon
the authority of Arthur Andersen, LLP, as experts in accounting and auditing in
giving the report.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Long Island Lighting Company as of March 31, 1998 and for the
twelve months ended March 31, 1998, the three months ended March 31, 1997 and
the twelve months ended December 31, 1996 and related schedule included in our
Annual Report on Form 10-K, as amended, for the Transistion period from April 1,
1998 to December 31, 1998, as set forth in their Report, which is incorporated
by reference, in this prospectus and elsewhere in the registration statement.
These financial statements and schedule are incorporated by reference herein in
reliance upon Ernst & Young LLP's report, given upon their authority, as experts
in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the debt
securities and the guarantees being registered, other than the underwriting
discounts and commissions, are as follows:
Securities and Exchange Commission Registration Fee $166,800
Legal Fees and Expenses $125,000
Accountants Fees and Expenses $120,000
Trustee Fees and Expenses $ 15,000
Rating Agency Fees $250,000
Printing and Delivery Expenses $ 20,000
Miscellaneous Expenses $ 3,200
--------
Total* $700,000
=======
____________
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The New York Business Corporation Law ("BCL"), Article 7, Sections
721-726 provide for the indemnification and advancement of expenses to officers
and directors. Section 721 provides that indemnification and advancement
pursuant to the BCL are not exclusive of any other rights an officer or director
may be entitled to, provided that no indemnification may be made to or on behalf
of any director or officer if a judgment or other final adjudication adverse to
the director or officer establishes that his acts were committed in bad faith or
were the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that the director personally gained a
financial profit or other advantage to which he was not legally entitled.
Section 722 of the BCL provides that a corporation may indemnify an
officer or director, in the case of third party actions, against judgments,
fines, amounts paid in settlement and reasonable expenses and, in the case of
derivative actions, against amounts paid in settlement and reasonable expenses,
provided that the director or officer acted in good faith, for a purpose which
he reasonably believed to be in the best interests of the corporation and, in
the case of criminal actions, had no reasonable cause to believe his conduct was
unlawful. In addition, statutory indemnification may not be provided in
derivative actions (i) which are settled or otherwise disposed of or (ii) in
which the director or officer is adjudged liable to the corporation, unless and
only to the extent a court determines that the person is fairly and reasonably
entitled to indemnity.
Section 723 of the BCL provides that statutory indemnification is
mandatory where the director or officer has been successful, on the merits or
otherwise, in the defense of a civil or criminal action or proceeding. Section
723 also provides that expenses of defending a civil or criminal action or
proceeding may be advanced by the corporation upon receipt of an undertaking to
repay them if and to the extent the recipient is ultimately found not to be
entitled to indemnification. Section 725 provides for repayment of such expenses
when the recipient is ultimately found not to be entitled to indemnification.
Section 726 provides that a corporation may obtain indemnification insurance
indemnifying itself and its directors and officers. The Issuer and the Guarantor
have in effect insurance policies providing both directors and officers
liability coverage and corporate reimbursement coverage.
Section 402(b) of the BCL provides that a corporation may include in its
certificate of incorporation a provision limiting or eliminating, with certain
exceptions, the personal liability of directors to a corporation or its
shareholders for damages for any breach of duty in such capacity. The
certificate of incorporation of both the Issuer and the Guarantor contain
provisions eliminating the personal liability of Directors to the extent
permitted by New York law.
The Issuer's and the Guarantor's certificates of incorporation provide
generally that they shall, except to the extent expressly prohibited by the BCL,
indemnify each of their officers and directors made or threatened to be made a
party to any action, suit or proceeding, or appeal thereof, whether civil or
criminal by reason of the fact that such person is or was an officer or director
against all expense, liability and loss (including, but not limited to all
attorneys' fees, judgements, fines, pension plan taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith. The certificates of incorporation further provide for
advancement and reimbursement of such expenses incurred by an officer or
director in defending any action or proceeding in advance of the final
disposition thereof upon receipt of an undertaking by such person to repay such
amount if, and to the extent that, such person is ultimately found not to be
entitled to indemnification.
ITEM 16. LIST OF EXHIBITS
See Exhibit Index
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii)To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the Registration Statement is on Form S-3, Form S-8,
or Form F-3 and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Securities and Exchange
Commission by the Guarantor pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Guarantor's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of such
registrants pursuant to the provisions referred to in Item 15 of this
registration statement, or otherwise, such registrants have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by such registrants of expenses incurred or paid by a director,
officer or controlling person of such registrants in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, such
registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, KeySpan Gas East
Corporation, one of the registrants, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Brooklyn, State of New
York, on the 30th day of November, 1999.
KEYSPAN GAS EAST CORPORATION
Issuer of Securities
(Registrant)
By: /s/ Anne C. Jordan
- -----------------------
Anne C. Jordan
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signatures and Titles Date
*
___________________
Robert J. Fani
President, Chief Executive Officer and Director November 30, 1999
(Principal Executive Officer)
/s/ Anne C. Jordan
- -------------------------
Anne C. Jordan
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) November 30, 1999
/s/ Paul R. Nick
- -------------------------
Paul R. Nick
Controller and Chief Accounting Officer November 30, 1999
*
______________
Robert J. Fani November 30, 1999
Director
*
___________________
George B. Jongeling
Director November 30, 1999
/s/ Paul R. Nick
- -------------------------
Paul R. Nick, as Attorney-In-Fact
Controller and Chief Accounting Officer November 30, 1999
- ------------------------
* Such signature has been affixed pursuant to a power
of attorney filed as an exhibit hereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, KeySpan Corporation,
one of the registrants, certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Brooklyn, State of New York, on the 30th day of
November, 1999.
KEYSPAN CORPORATION
Guarantor of Securities
(Registrant)
By: /s/ Gerald Luterman
- ------------------------
Gerald Luterman
Chief Financial Officer and Senior Vice-President
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signatures and Titles: Date:
*
________________
Robert B. Catell
Chief Executive Officer and Director:
(Principal Executive Officer) November 30, 1999
/s/ Gerald Luterman
- -----------------------
Gerald Luterman
Chief Financial Officer and Senior Vice-President
(Principal Financial and Accounting Officer) November 30, 1999
/s/ Ronald Jendras
- ----------------------
Ronald Jendras
Vice President, Controller and Chief Accounting Officer November 30, 1999
*
_____________________
Lilyan H. Affinito
Director November 30, 1999
*
_____________________
George Bugliarello
Director November 30, 1999
*
____________________
Richard N. Daniel
Director November 30, 1999
*
____________________
Donald H. Elliot
Director November 30, 1999
*
____________________
Alan H. Fishman
Director November 30, 1999
*
______________________
James R. Jones
Director November 30, 1999
*
_____________________
Stephen W. McKessy
Director November 30, 1999
*
_____________________
Edward D. Miller
Director November 30, 1999
*
_____________________
Basil A. Paterson
Director November 30, 1999
*
_____________________
James Q. Riordan
Director November 30, 1999
*
_____________________
Frederic V. Salerno
Director November 30, 1999
*
______________________
Vincent Tese
Director November 30, 1999
/s/ Ronald Jendras
- ---------------------- November 30, 1999
Ronald Jendras, Attorney-In-Fact
Vice President, Controller and Chief Accounting Officer
- --------------------
* Such signature has been affixed pursuant to a power of attorney filed as an
exhibit hereto.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibits
1* Form of Distribution Agreement
2 Agreement and Plan of Merger, dated as of November 4, 1999,
by and among KeySpan Corporation, Eastern Enterprises and
ACJ Acquisition LLC (filed as Exhibit 2 to KeySpan's Current
Report on Form 8-K dated November 5, 1999 and incorporated
herein by reference)
4-a* Form of Indenture, dated as of December 1, 1999, between the
registrants and The Chase Manhattan Bank, as trustee. The
form or forms of debt security with respect to each
particular series of debt securities registered hereunder
(other than Medium-Term Notes) will be filed as an exhibit
to a Current Report on Form 8-K and shall be deemed to be
incorporated herein by reference.
4-b* Form of Medium-Term Notes
5* Opinion of Steven L. Zelkowitz as to the legality of the
debt securities to be issued
12 Computation of ratio of earnings to fixed charges
23-a Consent of Arthur Andersen, LLP, Independent Accountants
23-b Consent of Ernst & Young, LLP, Independent Auditors
23-c*Consent of Steven L. Zelkowitz (contained in his Opinion
filed as Exhibit 5 hereto)
24-a* Powers of Attorney
24-b Certified resolution of the Board of Directors of KeySpan
Corporation authorizing signatures pursuant to power of
attorney
24-c Certified resolution of the Board of Directors of KeySpan
Gas East Corporation authorizing signatures pursuant to
power of attorney
25* Statement of Eligibility of The Chase Manhattan Bank on Form
T-1
-----------------------
* To be filed by amendment.
Computation of Consolidated Ratio of Earnings to Fixed Charges
KEYSPAN CORPORATION
<TABLE>
<CAPTION>
Twelve Months Twelve Months Twelve Months Twelve Months Nine Months
Ended Ended Ended Ended Nine Months Ended Ended
December 31, 1995 December 31, 1996 March 31, 1997 March 31, 1998 December 31, 1998 September30,1999
------------------ ------------------ -------------- --------------- ------------------- -----------------
Earnings
<S> <C> <C> <C> <C> <C> <C>
Net Income 303,286 316,464 322,409 362,240 (196,074) 180,452
Federal Income Tax 205,538 209,257 211,333 232,653 (159,500) 98,372
Interest on Long-Term Debt 412,512 384,198 372,108 351,261 117,388 83,782
Other Interest Charges 63,461 67,130 66,818 57,805 22,800 13,062
Portion of Rentals Representing
Interest 4,701 4,758 3,390 3,309 9,641 10,112
Adjustment Related to Equity
Investments 92 (24) (22) (5) (1,623) (3,374)
------------- -------------- --------------- ---------- ------------ ------------------
Earnings Available to Cover
Fixed Charges 989,590 981,783 976,036 1,007,263 (207,368) 382,406
============= ============== =============== ========== ============ ==================
Fixed Charges
Interest on Long-Term Debt 412,512 384,198 372,108 351,261 125,198 92,373
Other Interest Charges 63,461 67,130 66,818 57,805 22,800 13,062
Portion of Rentals Representing
Interest 4,701 4,758 3,390 3,309 9,641 10,112
------------- -------------- --------------- ---------- ------------ ------------------
Total Fixed Charges 480,674 456,086 442,316 412,375 157,639 115,547
============= ============== =============== ========== ============ ==================
Ratio of Earnings to Fixed
Charges 2.06 2.15 2.21 2.44 (a) 3.31
============= ============== =============== ========== ============ ==================
</TABLE>
(a) For the nine months ended December 31, 1998, earnings were insufficient to
cover fixed charges by $365.0 million. During the nine months ended
December 31, 1998 the Company incurred the following special charges (after
tax): charges associated with the transaction with Long Island Power
Authority of $107.9 million; charges associated with the merger with
KeySpan Energy of $83.5 million; an impairment charge of $54.1 million to
write-down the value of proved gas reserves; and a charge of $13.0 million
to establish a not-for-profit philanthropic foundation.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 12, 1999
included in KeySpan Corporation's Form 10-K for the nine months ended December
31, 1998.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
December 2, 1999
New York, New York
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and the related Prospectus of KeySpan
Corporation for the registration of $600,000,000 of debt securities and to the
incorporation by reference therein of our report dated May 22, 1998, with
respect to the financial statements and schedule of Long Island Lighting Company
included in the Annual Report (Form 10-K), as amended, of MarketSpan Corporation
for the year ended December 31, 1998, filed with the Securities and Exchange
Commission.
/S/ERNST & YOUNG LLP
December 2, 1999
Melville, New York
EXTRACT
MINUTES OF THE MEETINGS OF THE
BOARD OF DIRECTORS
OF
KEYSPAN ENERGY
The Chairman referred to the report by Mr. Luterman on the desirability of
the Corporation providing a parent guaranty, on an unsecured basis, for KeySpan
Gas East Corporation d/b/a/ Brooklyn Union of Long Island's ("BULI") to issue up
to $800 million of debt securities. The proceeds from the sale of the debt
securities may be used to satisfy BULI's outstanding obligations to the
Corporation, for utility plant construction, investments in short_term
securities or other corporate purposes. The parent guarantee will enhance the
marketability of the debt securities. After discussion, upon motion duly
seconded, it was
RESOLVED, that the proper officers of the Corporation are hereby authorized,
directed and empowered, in the name and on behalf of the Corporation, to
execute, file and deliver any document required to evidence the guarantee of
this Corporation of up to $800 million of debt securities to be issued by BULI,
including any amendments, modifications or supplements thereto;
RESOLVED, that the proper officers of the Corporation are hereby authorized,
directed and empowered, in the name and on behalf of the Corporation, to
execute, file and deliver to the Securities and Exchange Commission a
Registration Statement reflecting the guarantee of the debt securities to be
issued by BULI, as well as any and all such other required documents,
certificates, instruments, or regulatory filings, including any amendments,
modifications or supplements thereto;
RESOLVED, that the proper officers of the Corporation are hereby authorized,
empowered and directed to retain such underwriters, advisors, consultants or
counsel as such proper officers deem necessary, appropriate or desirable in
connection with the action authorized by the foregoing resolutions, and to take
all such further action, as any such officer deems necessary, proper, convenient
or desirable in order to carry out each of the foregoing resolutions and to
effectuate the purposes and intents thereof, the taking of any such action to be
conclusive evidence of the approval thereof by the directors of the Corporation;
and
FURTHER RESOLVED, that each of the Chairman, Chief Executive
Officer, President, any Senior Vice President or any Vice President of the
Corporation shall be considered a proper officer of the Corporation for the
purposes of each of the foregoing resolutions.
EXTRACT
WRITTEN CONSENT OF THE BOARD OF DIRECTORS
OF
KEYSPAN GAS EAST CORPORATION
The Directors of KeySpan Gas East Corporation acting by unanimous written
consent without a meeting pursuant to Section 708(b) of the New York Business
Corporation Law adopted the following resolutions:
RESOLVED, that the proper officers of the Corporation are hereby
authorized, directed and empowered in the name and on behalf of the Corporation,
to execute, file and deliver any document required for the Corporation to issue
up to an aggregate principal amount of $800 million of debt securities,
including any amendments, modifications or supplements thereto, including, by
way of illustration and not by way of limitation, the following:
(1) execute, file and deliver to the Securities and Exchange Commission
a Registration Statement reflecting the issuance of up to an
aggregate principal amount of $800 million of debt securities by the
Corporation, as well as any and all such other required documents,
certificates, instruments, or regulatory filings, including any
amendments, modifications or supplements thereto;
(2) determine from time to time the principal amount of the debt
securities to be sold and issued up to an aggregate principal amount
of $800 million;
(3) enter into an indenture for debt securities, including any amendments,
modifications or supplements thereto and to appoint agents under such
indenture;
(4) enter into a trust agreement for the debt securities, including any
amendments, modifications or supplements thereto and to appoint a
trustee under such trust agreement;
(5) enter into underwriting, distribution or similar agreements for the
debt securities, including any amendments, modifications or
supplements thereto;
(6) appoint attorneys-in-fact to act on behalf of any of the officers or
directors of the Corporation;
(7) determine the compensation to be paid for arranging the sale of the
debt securities;
(8) list the debt securities on the New York or Pacific Stock Exchange, if
appropriate;
(9) take all actions necessary or desirable under the securities or Blue
Sky laws of the various states relating to the debt securities;
(10) prepare, execute and deliver all instruments (manually, electronically
or by facsimile), which may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument and
RESOLVED, that the proper officers are hereby authorized, directed and empowered
to undertake all such further action, as any such proper officer deems
necessary, proper, convenient or desirable in order to carry out the intent of
the foregoing resolution and to effectuate the purposes and intents thereof, the
taking of any such action to be conclusive evidence of the approval thereof by
the directors of the Corporation;
RESOLVED, that any action taken and any instrument or document prepared,
executed, delivered or filed by the proper officers prior to the adoption of
these resolutions to accomplish any of the actions authorized by these
resolutions is ratified, confirmed and approved in all respects. RESOLVED, that
the President and Chief Executive Officer, the Chief Financial Officer, any Vice
President, the Treasurer, the Controller, the Chief Accounting Officer or the
Secretary of the Corporation be and each of them shall be considered a proper
officer for each of the foregoing resolutions.
I, Robert D. Ekholm, Secretary of KeySpan Gas East Corporation, DO
HEREBY CERTIFY that the foregoing is a true and correct copy of resolutions duly
adopted by the Board of Directors of said Corporation by unanimous written
consent on November 24, 1999, and that such resolutions are in full force and
effect on the date of this certification.
WITNESS my hand and seal of the Corporation this 30th day of November,
1999.
/s/ Robert D. Ekholm
--------------------
Robert D. Ekholm, Secretary
