SUBJECT TO COMPLETION, OCTOBER 3, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED October 3, 1996) [LOGO]
120,000 SHARES
GREEN MOUNTAIN POWER CORPORATION
% PREFERRED STOCK, CLASS E, SERIES 1
($100 PAR VALUE)
------------------
All of the shares of the Preferred Stock offered hereby (the "New Preferred
Stock") are being sold by Green Mountain Power Corporation (the "Company" or
"GMP"). The New Preferred Stock is not subject to redemption prior to ,
2006, except in certain limited circumstances described herein. Thereafter, the
New Preferred Stock may be redeemed, in whole or in part, at any time at the
option of the Company, at the prices set forth herein. The New Preferred Stock
will not be entitled to any sinking fund. See "TERMS OF THE NEW PREFERRED STOCK"
in the Prospectus Supplement and "DESCRIPTION OF NEW PREFERRED STOCK" in the
accompanying Prospectus for important information about the New Preferred Stock.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE
PROSPECTUS OR ANY SUPPLEMENT THERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
=================================================================================================
Underwriting
Price to Discounts and Proceeds to the
Public (1) Commissions (2) Company (3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share ............................ $ $ $
- -------------------------------------------------------------------------------------------------
Total (3) ............................ $ $ $
=================================================================================================
</TABLE>
(1) Plus accrued dividends, if any, from the date of original issue.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting".
(3) Before deducting expenses payable by the Company estimated at $295,000.
------------------
The shares of New Preferred Stock are offered by the Underwriter named
herein, subject to prior sale, when, as and if delivered to and accepted by the
Underwriter and subject to certain conditions. It is expected that certificates
for the New Preferred Stock will be available for delivery on or about ,
1996 at the office of Smith Barney Inc., 333 West 34th Street, New York, New
York 10001.
SMITH BARNEY INC.
October , 1996
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following summary consolidated financial data should be read in
conjunction with the financial statements and the notes thereto of the Company
incorporated by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
12 MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------
JUNE 30, 1996 1995 1994 1993
-------------- -------- -------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Operating Revenues................... $173,275 $161,544 $148,197 $147,253
Operating Income..................... 14,975 15,295 14,517 14,826
Net Income........................... 11,373 11,503 11,002 10,631
Ratio of Earnings to Fixed Charges
and Preferred Dividends.............. 2.51 2.57 2.44 2.46
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996 (UNAUDITED)
----------------------------------------
ACTUAL ADJUSTED (1)
------------------ --------------------
AMOUNT % AMOUNT %
------ - ------ -
<S> <C> <C> <C> <C>
CAPITALIZATION
Long-Term Debt (2) .................... $ 83,934 41.7 $ 97,934 43.1
Redeemable Cumulative Preferred Stock.. 8,930 4.4 20,930 9.2
Common Stock Equity ................... 108,571 53.9 108,571 47.7
-------- ------- -------- -------
Total Capitalization ................. 201,435 100.0 227,435 100.0
======== ======= ======== =======
Short-Term Debt ........................ 18,615 0
</TABLE>
- ----------
(1) As adjusted to give effect to the application of the estimated proceeds
from the sale of the New Preferred Stock and the issuance of $14 million of
the Company's First Mortgage Bonds which is anticipated to occur in the
fourth quarter of 1996.
(2) Including current maturities of $1.7 million and excluding $5.1 million in
long-term debt of the Company's wholly-owned subsidiaries.
S-2
<PAGE>
THE COMPANY
Green Mountain Power Corporation (the "Company" or "GMP") is a public utility
operating company engaged principally in supplying electrical energy in the
State of Vermont in a territory with an estimated population of 198,000. It
serves approximately 81,500 customers.
TERMS OF THE NEW PREFERRED STOCK
The following information concerning the New Preferred Stock offered hereby
supplements and should be read in conjunction with the information under
"Description of New Preferred Stock" in the accompanying Prospectus.
Securities Offered. 120,000 shares of New Preferred Stock, designated as
% Preferred Stock, Class E, Series 1. The Company does not intend to list
the New Preferred Stock on any securities exchange. There is no existing trading
market for the New Preferred Stock and the Company can give no assurances that a
trading market will develop for the New Preferred Stock.
Ranking. The New Preferred Stock ranks senior to the Company's Common Stock,
$3.33 1/3 par value ("Common Stock") and pari passu with the Company's other
classes of Preferred Stock with respect to the entitlement to dividends and
amounts upon liquidation, dissolution and winding up of the Company.
Dividends. Dividends on the New Preferred Stock are cumulative at the rate of
$ per share from the date of original issue and are payable quarterly on
the first day of March, June, September and December of each year commencing on
December 1, 1996 for the period from, and including, the date of original
issuance through and including November 30, 1996. The amount of dividends
payable on the New Preferred Stock may be subject to adjustment in the event of
the enactment of certain proposed amendments to the Internal Revenue Code of
1986, as amended (the "Code") relating to the dividends received deduction. See
"Terms of the New Preferred Stock Relating to Changes in the Code".
Redemption Provisions. Except as described in "Terms of the New Preferred
Stock Relating to Changes in the Code", the New Preferred Stock is not
redeemable prior to , 2006. On or after , 2006, the New Preferred
Stock may be redeemed at the option of the Company in whole, or in part by lot,
on at least 30 days' notice at the applicable redemption price per share set
forth below, plus accrued and unpaid dividends:
REDEMPTION PRICE
TWELVE MONTH PERIOD BEGINNING , PER SHARE
----------------------------------------- ---------------------
2006 ....................................
2007 ....................................
2008 ....................................
2009 ....................................
2010 ....................................
2011 ....................................
2012 ....................................
2013 ....................................
2014 ....................................
2015 ....................................
2016 and thereafter .....................
The New Preferred Stock is not subject to any mandatory redemption, sinking fund
or other similar provisions. See "Terms of the New Preferred Stock Relating to
Changes in the Code" for a discussion of the terms of the Company's right to
optionally redeem the New Preferred Stock in the event of possible changes in
the Code concerning the dividends received deduction.
Liquidation Rights. The holders of the New Preferred Stock are entitled to
receive upon liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, $100 per share of the New Preferred Stock together
with accrued dividends, plus, in the case such liquidation, dissolution or wind-
S-3
<PAGE>
ing up shall have been voluntary, an amount per share equal to the redemption
premium that would then be payable to the holder thereof if such New Preferred
Stock were to be redeemed at the option of the Company, before any amount is
paid to the holders of the Company's Common Stock and Preference Stock, if any.
In case the assets of the Company are insufficient to pay the holders of all
classes and series of Preferred Stock in full, such holders will share ratably
in such assets.
Terms of the New Preferred Stock Relating to Changes in the Code. Tax
proposals have been released that may affect holders of the New Preferred Stock.
Under certain of these proposals, the dividends received deduction applicable to
the New Preferred Stock would be reduced or eliminated. The Company cannot
predict whether any of these proposals will be enacted into law.
Adjustment to the Dividend Rate. If one or more amendments to the Code are
enacted that reduce the percentage of the dividends received deduction as
specified in Section 243(a)(1) of the Code or any successor provision (the
"Dividends Received Percentage") that is currently available to corporate
shareholders for certain dividends received from another corporation in which
the shareholder owns less than 20 percent (by vote and value) to below the
existing Dividends Received Percentage (currently 70%), the amount of each
dividend payable per share of the New Preferred Stock for dividend payments made
on or after the effective date of such change will be adjusted by multiplying
the amount of the dividend payable determined as described above (before
adjustment) by a factor, which will be the number determined in accordance with
the following formula (the "DRD Formula"), and rounding the result to the
nearest cent:
1-(.35 (1-.70))
---------------
1-(.35 (1-DRP))
For purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage applicable to the dividend in question. No amendment to the Code,
other than a change in the Dividends Received Percentage, will give rise to an
adjustment. Notwithstanding the foregoing provisions, in the event that, with
respect to any such amendment, the Company receives either an unqualified
opinion of independent nationally recognized tax counsel selected by the Company
or a private letter ruling or similar form of authorization from the Internal
Revenue Service to the effect that such an amendment would not apply to
dividends payable on the New Preferred Stock, then any such amendment will not
result in the adjustment provided for pursuant to the DRD Formula. The opinion
referenced in the immediately preceding sentence will be based upon a specific
exception in the legislation amending the DRP or upon a published pronouncement
of the Internal Revenue Service addressing such legislation. Unless the context
otherwise requires, references to dividends in this Prospectus Supplement will
mean dividends as adjusted by the DRD Formula. The Company's calculation of the
dividends payable, as so adjusted and as certified accurate as to calculation
and reasonable as to method by the independent certified public accountants then
regularly engaged by the Company, will be final and not subject to review absent
manifest error.
If any amendment to the Code which reduces the Dividends Received Percentage
to below 70% is enacted after and applies to a dividend payable on a dividend
payment date has been declared, the amount of dividend payable on such dividend
payment date will not be increased. Instead, an amount equal to the excess of
(i) the product of the dividend paid by the Company on such dividend payment
date and the factor determined in accordance with the DRD Formula (where the DRP
used in the DRD Formula would be equal to the reduced Dividends Received
Percentage) over (ii) the dividend paid by the Company on such dividend payment
date, will be payable to holders of record on the next succeeding dividend
payment date in addition to any other amounts payable on such date.
In addition, if, prior to March 31, 1997, an amendment to the Code is enacted
that reduces the Dividends Received Percentage to below 70% and such reduction
retroactively applies to a dividend payment date as to which the Company
previously paid dividends on the New Preferred Stock (each an "Affected Dividend
Payment Date"), the Company will pay (if declared) additional dividends (the
"Additional Dividends") on the next succeeding dividend payment date (or if such
amendment is enacted after the dividend payable on such dividend payment date
has been declared, on the second
S-4
<PAGE>
succeeding dividend payment date following the date of enactment) to holders of
record on such succeeding dividend payment date in an amount equal to the excess
of (i) the product of the dividends paid by the Company on each Affected
Dividend Payment Date and the factor determined in accordance with the DRD
Formula (where the DRP used in the DRD Formula would be equal to the Dividends
Received Percentage applied to each Affected Dividend Payment Date) over (ii)
the dividend paid by the Company on each Affected Dividend Payment Date.
Additional Dividends will not be paid in respect of the enactment of any
amendment to the Code on or after March 31, 1997 which retroactively reduces the
Dividends Received Percentage to below 70%, or if prior to March 31, 1997, such
amendment would not result in an adjustment due to the Company having received
either an opinion of counsel or tax ruling referred to in the third preceding
paragraph. The Company will only make one payment of Additional Dividends.
In the event that the amount of dividends payable per share on the New
Preferred Stock is adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, the Company will cause notice of each such adjustment
and, if applicable, any Additional Dividends, to be sent to the holders of the
New Preferred Stock.
Additional Redemption Provisions. In the event that the Dividends Received
Percentage is reduced to 40% or less, and, as a result, the amount of dividends
on the New Preferred Stock payable on any dividend payment date is adjusted
upwards as described above, the Company may, at its option, redeem the New
Preferred Stock, in whole but not in part, provided that within 90 days from the
date on which the amendment to the Code is enacted which reduces the Dividends
Received Percentage to 40% or less, the Company sends notice to holders of the
New Preferred Stock of such redemption. A redemption of the New Preferred Stock
in accordance with this paragraph shall be at the applicable redemption price
set forth in the following table, in each case plus accrued and unpaid dividends
(whether or not declared) thereon to, but excluding, the date fixed for
redemption, including any changes in dividends payable due to changes in the
Dividends Received Percentage and Additional Dividends, if any.
REDEMPTION PRICE
REDEMPTION PERIOD PER SHARE
----------------------------------------------- -----------------
, 1996 to , 1997............ $ 105.00
, 1997 to , 1998............ 104.00
, 1998 to , 1999............ 103.00
, 1999 to , 2000............ 102.00
, 2000 to , 2001............ 101.00
On or after , 2001................... 100.00
Conversion or Exchange Rate. The New Preferred Stock will not be entitled to
conversion or exchange rights.
Voting Rights. Except as described under "Description of New Preferred
Stock--Voting Rights" in the accompanying Prospectus, the New Preferred Stock
does not have any voting rights.
S-5
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the New Preferred Stock will
be applied primarily to the repayment of short-term bank borrowings, to the
retirement of fixed income securities and for other general corporate purposes.
UNDERWRITING
Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated the date hereof, Smith Barney Inc., the Underwriter, has agreed
to purchase, and the Company has agreed to sell to such Underwriter, 120,000
shares of the New Preferred Stock.
The Underwriting Agreement provides that the obligations of the Underwriter
to pay for and accept delivery of the shares are subject to approval of certain
legal matters by counsel and to certain other conditions. The Underwriter is
obligated to take and pay for all shares of the New Preferred Stock if any such
shares are taken.
The Underwriter proposes to offer part of the shares directly to the public
at the public offering price set forth on the cover page of this Prospectus
Supplement and part of the shares to certain dealers at a price which represents
a concession not in excess of $ per share under the public offering price.
The Underwriter may allow, and such dealers may reallow, a concession not in
excess of $ per share to certain other dealers. After the initial offering
of the New Preferred Stock, the public offering price and other terms may be
changed by the Underwriter.
The New Preferred Stock will not be listed for trading on any securities
exchange. The Underwriter will not be obligated to make a market in the New
Preferred Stock and the Underwriter has advised the Company that it does not
intend to make a market in the New Preferred Stock. The Company cannot predict
the activity of trading in, or liquidity of, the New Preferred Stock.
The Company and the Underwriter have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.
Smith Barney Inc. has provided investment banking services to the Company for
which it has received transaction fees, as applicable, plus out-of-pocket
expenses, of the nature and in amounts customary in the industry for such
services.
S-6
<PAGE>
PROSPECTUS
GREEN MOUNTAIN POWER CORPORATION
FIRST MORTGAGE BONDS
UNSECURED NOTES
PREFERRED STOCK
COMMON STOCK
------------------
Green Mountain Power Corporation (the "Company") intends from time to time to
sell its First Mortgage Bonds (the "New Bonds"), Unsecured Notes (the "Notes"),
Preferred Stock, Class E, $100 par value (the "New Preferred Stock") and/or
Common Stock, $3.33 1/3 par value (the "New Common Stock") (the "New Bonds" and
the "Notes" being collectively referred to herein as the "Debt Securities", and
the "Debt Securities", the "New Preferred Stock" and the "New Common Stock"
being collectively referred to herein as the "Securities") in any combination at
an aggregate initial offering price not to exceed $50,000,000. The Securities
will be offered at prices and on terms to be determined at the times of sale.
For each issue of the Debt Securities and New Preferred Stock for which this
Prospectus will be delivered, there will be an accompanying Prospectus
Supplement, together with any accompanying Pricing Supplement, that will set
forth the specific terms of the Debt Securities or New Preferred Stock of such
issue, as the case may be. For each issue of the New Common Stock for which this
Prospectus will be delivered, there will be an accompanying Prospectus
Supplement that will set forth the terms of the offering. The Common Stock is
traded on the New York Stock Exchange. Its price and volume data are reported on
the New York Stock Exchange using the symbol "GMP". The sale of one of the
Securities will not be contingent upon the sale of any other.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Securities may be sold directly by the Company or through agents
designated from time to time or through underwriters or dealers. If any agents
of the Company or any underwriters are involved in the sale of the Securities in
respect of which this Prospectus will be delivered, the names of such agents or
underwriters, and the initial price to the public, any applicable commissions or
discounts and the net proceeds to the Company, or the means of determining the
same, will be set forth in an accompanying Prospectus Supplement or Supplements.
The Company may indemnify agents and underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended.
See "Plan of Distribution".
The date of this Prospectus is October 3, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement and such exhibits and schedules may be inspected without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C., and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, New York 10048, and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, at prescribed rates. Copies
of such material may also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's
Common Stock is listed on the New York Stock Exchange. The Commission also
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission and the address of that Web site is http://www.sec.gov. Such reports,
proxy statements and other information concerning the Company can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed with the Commission (File No.
1-8291) pursuant to the Exchange Act, are hereby incorporated by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1995.
(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended March
31 and June 30, 1996.
All documents filed by the Company pursuant to Section 13(a) and (c), 14 or
15(d) of the Securities and Exchange Act after the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded, for purposes of this Prospectus, to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide, without charge, to each person,
including any beneficial owner, to whom a copy of this Prospectus shall have
been delivered, upon the written or oral request of any such person, a copy of
any or all of the documents which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such documents. Written
or telephone requests for such copies should be directed to the Corporate
Secretary, Green Mountain Power Corporation, 25 Green Mountain Drive, P. O. Box
850, South Burlington, Vermont 05402-0850 (Telephone 802-864-5731).
THE COMPANY
The Company is a public utility operating company engaged in supplying
electrical energy in the State of Vermont in a territory with an estimated
population of 198,000. The Company has its principal executive office at 25
Green Mountain Drive, P. O. Box 850, South Burlington, Vermont 05402-0850
(Telephone 802-864-5731.) It serves approximately 81,500 customers.
2
<PAGE>
COVERAGE RATIOS
As computed in accordance with Regulation S-K of the Commission, the
Company's ratios of earnings to fixed charges and preferred stock dividends and
earnings to fixed charges for each of the years 1991 through 1995, and for the
twelve months ended June 30, 1996, are as follows:
RATIO OF
EARNINGS TO RATIO OF
FIXED CHARGES AND EARNINGS TO
PREFERRED STOCK DIVIDENDS FIXED CHARGES
YEAR ENDED (1) (1)
- --------------------------------- --------------------------- --------------
December 31, 1991 2.40 2.73
December 31, 1992 2.66 3.01
December 31, 1993 2.46 2.78
December 31, 1994 2.44 2.74
December 31, 1995 2.57 2.87
Twelve Months Ended June 30, 1996 2.51 2.80
- ----------
(1) Earnings consist of pretax income plus fixed charges as defined in Item
503 paragraph (d)(3). Fixed charges computed pursuant to paragraph (d)(4) of
Item 503 consist of interest on all indebtedness, amortization of debt expense
and discount or premium relating to any indebtedness, and the estimated interest
portion of rentals charged to income. Preferred Stock dividends consist of
dividends paid on all outstanding Preferred Stock.
USE OF PROCEEDS AND FINANCING PROGRAM
The net proceeds to be received by the Company from the sale of the
Securities will be applied to the refunding of long-term debt, the financing of
capital projects and the repayment of short-term bank borrowings incurred for
such purposes and for other general corporate purposes.
The Company expects its capital expenditures in 1996 to be approximately $28
million. The Company expects such expenditures for the five-year period,
1996-2000, to aggregate approximately $101 million.
The Company anticipates that for the period 1996 - 2000, internally generated
funds, after payment of dividends, will provide approximately 73 percent of
total capital expenditure requirements for construction, sinking fund
obligations and other requirements. The remaining amount will be funded through
short-term borrowings, which will be refinanced periodically through the sale of
long-term debt and equity securities, in such amounts and at such times as the
Company's cash requirements and market conditions shall determine.
DESCRIPTION OF THE NEW BONDS
THE STATEMENTS UNDER THIS CAPTION ARE INTENDED TO SUMMARIZE THE NEW BONDS AND
THE MORTGAGE; THEY DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR
ENTIRETY BY REFERENCE TO THE NEW BONDS AND THE MORTGAGE, COPIES OF WHICH HAVE
BEEN FILED AS EXHIBITS TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS
A PART.
General. The New Bonds are to be issued under the Company's Indenture of
First Mortgage and Deed of Trust, dated as of February 1, 1955, to the United
States Trust Company of New York [successor to the Chase Manhattan Bank
(National Association), successor to the Chase National Bank of the City of New
York], as trustee, as supplemented by 16 supplemental indentures and as to be
further supplemented by one or more additional supplemental indentures providing
for one or more series of the New Bonds, all of which are collectively referred
to as the Mortgage.
Reference is made to the Prospectus Supplement or Supplements for each issue
of the New Bonds for the following terms, among others, of the New Bonds offered
thereby: (i) the series designation and aggregate principal amount thereof, (ii)
the initial public offering price and other terms of their offering, (iii) the
date or dates on which they will mature, (iv) the rate or rates per annum at
which they will bear
3
<PAGE>
interest, (v) the times at which such interest will be payable and the date from
which it will accrue, (vi) whether all or any portion thereof will be issued to
a designated depositary, (vii) any redemption or repayment provisions, and
(viii) other specific terms.
Form, Exchange and Payment. Unless otherwise indicated in the Prospectus
Supplement for an issue of the New Bonds, the New Bonds offered thereby will be
issued only in the form of a fully registered global bond, interests in which
will be transferable by a book-entry system in denominations of $1,000 and any
multiple thereof. If definitive New Bonds are exchanged for a global bond, they
will be issued in denominations of $1,000 and integral multiples of $1,000. See
"Book-Entry System."
Security. The New Bonds together with all other bonds ("Bonds") now or
hereafter issued under the Mortgage will be secured by the Mortgage, which, in
the opinion of Peter H. Zamore, Esq., General Counsel of the Company, subject
only to permitted encumbrances as defined in the Mortgage, constitutes a valid,
direct first mortgage lien upon the real and personal property described or
referred to in the Mortgage as owned by the Company (other than classes of
property expressly excepted in the Mortgage and property heretofore released
from the lien of the Mortgage in accordance with the terms thereof), which
include all of the physical properties and franchises of the Company used or
useful in its public utility business; and all physical properties and
franchises of the Company used or useful in its public utility business (other
than those of the character not subject to the lien of the Mortgage as
aforesaid) acquired by the Company after the respective dates of the Original
Indenture and each Supplemental Indenture have become, or will upon such
acquisition become, subject to the lien thereof, subject, however, to permitted
encumbrances and to liens, if any, existing or placed thereon by the Company at
the time of the acquisition thereof by the Company and, subject, in the case of
after acquired properties located in municipalities or counties in which the
Mortgage has not been recorded at or prior to the time of acquisition, to the
rights of holders or liens perfected on such properties prior to the recording
of the Mortgage in such municipalities or counties. There are excepted from the
lien of the Mortgage certain specifically excepted properties; all cash on hand
and in banks, contracts, shares of stock, bonds, notes, evidences of
indebtedness and other securities, bills, notes and accounts receivable and
other choses in action, conditional sales agreements and appliance rental or
lease agreements other than those expressly subjected to the Mortgage; all
equipment, materials and supplies not installed as part of the fixed property of
the Company and which are held for use or consumption in its business; all
goods, wares, merchandise, appliances and supplies, purchased, acquired or held
for the purpose of sale, lease or distribution; and gas, oil, coal, fissionable
material and other minerals and other products, fuel and other personal property
which are consumable in their use in the operation of the plants or systems of
the Company; office furniture, equipment and supplies; aircraft, automobiles,
trucks and similar vehicles; and certain other properties of the Company set
forth in the Mortgage. (See Mortgage, Granting Clauses.)
The Mortgage contains provisions subjecting after-acquired property (subject
to pre-existing liens) to the lien thereof, subject to limitations in the case
of consolidation, merger or sale of substantially all of the Company's assets.
(See Mortgage, Granting Clauses and Article Fourteen.)
The Mortgage provides that the trustees shall have a lien upon the mortgaged
property, prior to that of the Bonds, for the payment of their reasonable
compensation and expenses, and for indemnity against certain liabilities. (See
Mortgage, Section 15.10.)
Issuance of Additional Bonds. Additional Bonds of any series may be issued in
an aggregate principal amount equal to:
(1) 60 percent of unfunded net property additions (the cost or fair value at
the time of acquisition, whichever is less, of utility property charged to plant
accounts of the Company after December 31, 1954, less the minimum provision for
depreciation from said date);
(2) the principal amount of unfunded Bond Credits for the retirement of Bonds
of any series; and /or
(3) cash deposited with the Trustee;
4
<PAGE>
subject to the filing of an earnings certificate (except in the case of certain
refundings) showing net earnings available for interest (as defined), for a
period of 12 consecutive months within the 15 calendar months preceding the date
of application, to be at least two times annual interest requirements on bonded
debt then to be outstanding.
Property additions generally include the utility property, tangible or
intangible, of the Company, located in the United States of America, which
(except as provided below) is used by or useful to the Company in the business
of generating, manufacturing, storing, transmitting, distributing, utilizing,
purchasing, furnishing, supplying and/or disposing of electricity and/or gas,
for heat, light, power, or refrigeration or other uses, or in any business which
is incidental thereto, including, without limiting the generality of the
foregoing, all properties necessary or appropriate for generating,
manufacturing, storing, transmitting, distributing, utilizing, purchasing,
furnishing, supplying and/or disposing of electricity and/or gas, together with
betterments, improvements, additions, replacements, or alterations of, upon or
to such property of the Company acquired after December 31, 1954.
Utility property shall not be deemed to include any property excepted from
the lien of the Mortgage. As of July 31, 1996, approximately $35 million of
property additions and unfunded Bond Credits were available for use as the basis
for the issuance of Bonds.
The Mortgage contains certain restrictions upon the issuance of Bonds against
property subject to liens. The New Bonds will be issued against property
additions and/or unfunded Bond Credits for the retirement of Bonds. (See
Mortgage, Articles Two, Seven, Nine and Fourteen.)
The Mortgage provides that the Company and/or the Trustee may release
property from the lien of the Mortgage, so long as no default exists: (1) in the
ordinary course of the Company's business, with respect to property which has
become old or worn out, provided such property is replaced by the Company, and
in connection with a release, surrender, abandonment or termination of any
rights of the Company which is necessary, desirable or advisable in connection
with the conduct of the utility business of the Company; (2) upon written
request of the Company to the Trustee in connection with the sale of any such
property, provided that the Company shall receive fair consideration therefor
and provided that the release will not impair the security of the Mortgage; (3)
in connection with a condemnation by any government entity of property of the
Company, provided the Company receives fair value therefor; (4) without any
consent or release by the Trustee, in connection with a sale of property by the
Company of property no longer used or useful in the conduct of the Company's
business, provided that the aggregate value of any such property so disposed of
in any one calendar year shall not exceed the greater of $50,000 or 3/4 of 1% of
the outstanding Bonds; or (5) in connection with the taking, sale or release of
all or substantially all of the Company's property, upon the deposit of
Government or purchase money securities with the Trustee. (See Mortgage, Article
Seven.)
Defaults and Notice Thereof. The Mortgage defines the following events as
"defaults":
(1) failure to pay principal of, or premium (if any) on, any Bond when due;
(2) failure to pay interest on any Bond when due and continuance of such
failure for a period of 30 days;
(3) failure to discharge or satisfy any improvement, maintenance, or
depreciation fund obligation and continuance of such failure for a period of 60
days;
(4) failure to discharge or satisfy any sinking fund obligation and
continuance of such failure for a period of 20 Business Days;
(5) failure to perform or observe any of the other covenants, agreements or
conditions in the Mortgage and continuance of such failure for a period of 90
days following written notice by the Trustee or by holders of at least 15
percent in principal amount of the Bonds;
(6) the entry of an order for reorganization or appointment of a trustee or
receiver of all or a substantial part of the mortgaged property and continuance
of such order or appointment unstayed for a period of 90 days;
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(7) certain adjudications, petitions or consents in bankruptcy, insolvency or
reorganization proceedings or an admission of insolvency or an assignment for
the benefit of creditors by the Company; or
(8) the rendering of a judgment against the Company for the payment of moneys
in excess of the Judgment Amount (as herein defined) and continuance of such
judgment unsatisfied and without stay of execution for a period of 90 days after
(i) the entry of such judgment or (ii) the termination of any stay of execution
entered during the initial 90-day grace period; but only, in either case, if
such judgment shall have been continued unstayed or unsatisfied for a period of
10 days after the giving of written notice of default to the Company by the
Trustee or to the Company and the Trustee by the holders of at least 15 percent
in principal amount of the Bonds outstanding. As used herein, "Judgment Amount"
shall mean (a) $50,000 until the earlier to occur of (i) all Bonds of any series
established prior to the execution of the Company's Tenth Supplemental Indenture
having ceased to be outstanding, whether at their respective stated maturities
or through a provision for redemption prior to their stated maturities, or (ii)
the execution of a supplemental indenture with the written consent of the
holders of not less than 66 2/3 percent in principal amount of all Bonds of any
series heretofore created and issued (and, if more than one such series of Bonds
shall at the time be outstanding, not less than 66 2/3 percent in principal
amount of the Bonds of each such series), and (b) thereafter $1,000,000.
So long as one or more of such defaults shall continue to exist and provided
that the principal of all the Bonds shall not have already become due and
payable, either the Trustee (by notice in writing to the Company) or the holders
of not less than 25 percent in principal amount of the Bonds outstanding (by
notice in writing to the Company and the Trustee) may declare the principal of
and accrued interest on all Bonds then outstanding to be immediately due and
payable notwithstanding the Company's right, following such declaration but
prior to any sale of all or a substantial part of the mortgaged property, to
cure all defaults to the satisfaction of the Trustee in accordance with the
terms of the Indenture.
(See Mortgage, Article Twelve.)
The Mortgage does not require the Company to give the Trustee or any holders
of any Bonds periodic reports as to the Company's compliance with the provisions
of the Mortgage. The Company and the Trustee are required to provide the notices
and reports to the holders of the Bonds required by the Trust Indenture Act of
1939, as amended, and copies of the reports and information required under the
Securities Exchange Act of 1934, as amended.(See Mortgage, Article Eleven.)
Evidence to be Furnished to the Trustee. Compliance with Mortgage provisions
is evidenced by written statements of the Company's officers or persons selected
by the Company. In certain major matters the accounting, engineer, appraiser or
other expert must be independent. Various certificates and other papers,
including a certificate with respect to compliance with the terms of the
Mortgage and the absence of defaults, are required to be filed annually and upon
the occurrence of certain events. (See Mortgage, Sections 9.06, 9.07, 9.08.)
Modification of the Mortgage. The Mortgage may be amended and/or any past
default thereunder (except a default in the payment of the principal of,
premium, if any, or interest on any of the Bonds) and its consequences may be
waived with the consent of the holders of at least 66 2/3 percent in principal
amount of Bonds then outstanding, and of each series of Bonds then outstanding
and affected by the proposed modification or waiver. Upon the earlier to occur
of (i) all Bonds of any series established prior to the execution of the
Company's Tenth Supplemental Indenture having ceased to be outstanding, whether
at their respective stated maturities or through a provision for redemption
prior to their stated maturities, and (ii) the execution of a supplemental
indenture with the written consent of the holders of all Bonds of any series
created and issued prior to the date of the Tenth Supplemental Indenture, the
Mortgage may be amended and/or any past default thereunder (except a default in
the payment of the principal of, premium, if any, or interest on any of the
Bonds) and its consequences may be waived with the consent of the holders,
acting together as a single class, of at least 66 2/3 percent in principal
amount then outstanding of all Bonds issued pursuant to the Indenture and
affected by the proposed modification or waiver. In no instance shall any
modification regarding the terms of payment
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of principal of, premium, if any, and interest on the New Bonds or a waiver of
any past default with respect to payment of such principal, premium or interest
or its consequences be effected without the consent of the holders of the New
Bonds, nor may any modification affecting the lien of the Mortgage or reducing
the percentage in principal amount of Bonds required for modification, be
effected without the consent of the holders of all outstanding Bonds. (See
Mortgage, Article Eighteen and Tenth Supplemental Indenture.)
Concerning the Trustee. United States Trust Company of New York, successor to
the Chase Manhattan Bank (National Association), successor to the Chase National
Bank of the City of New York, is the trustee under the Mortgage.
DESCRIPTION OF THE NOTES
THE STATEMENTS UNDER THIS CAPTION ARE INTENDED TO SUMMARIZE THE NOTES AND THE
INDENTURE; THEY DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR
ENTIRETY BY REFERENCE TO THE NOTES AND INDENTURE, COPIES OF WHICH HAVE BEEN
FILED AS EXHIBITS TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A
PART.
General. The Notes are to be issued under an Indenture ("Indenture") between
the Company and The Bank of New York, as trustee ("Unsecured Trustee").
The Indenture provides that debt securities (including the Notes and
including both interest bearing and original issue discount securities) may be
issued thereunder, without limitation as to aggregate principal amount. (See
Indenture, Sec. 301.) All debt securities issued under the Indenture (including
the Notes) are collectively referred to as the "Indenture Securities". The
Indenture does not limit the amount of other debt, secured or unsecured, which
may be issued by the Company. The Notes will rank pari passu with all other
unsecured indebtedness of the Company. Substantially all of the materially
important physical properties of the Company are subject to the lien of the
Mortgage securing the Bonds. (See "Description of the New Bonds".)
Reference is made to the Prospectus Supplement or Supplements for each issue
of the Notes for the following terms, among others, of the Notes offered
thereby: (i) the series designation and aggregate principal amount thereof, (ii)
the initial public offering price and other terms of their offering, (iii) the
date or dates on which they will mature, (iv) the rate or rates per annum at
which they will bear interest, (v) the times at which such interest will be
payable and the date from which it will accrue, (vi) whether all or any portion
thereof will be issued to a designated depositary, (vii) any redemption or
repayment provisions, and (viii) other specific terms.
Form, Exchange and Payment. Unless otherwise indicated in the Prospectus
Supplement for an issue of the Notes, the Notes offered thereby will be issued
only in the form of a fully registered global note, interests in which will be
transferable by a book-entry system in denominations of $1,000 and any multiple
thereof. If definitive Notes are exchanged for a global note, they will be
issued in denominations of $1,000 and integral multiples of $1,000. See
"Book-Entry System."
Events of Default and Notice Thereof. The Indenture defines the following
events as "defaults":
(1) failure to pay any installment of interest on any Note within 30 days
after its stated maturity;
(2) failure to pay the principal of, or premium, if any, on any Note within
three business days after its maturity;
(3) failure to perform or breach of any covenant of the Company in the
Indenture (other than a covenant, a default in the performance of which is
elsewhere specifically dealt with or which has been included in the Indenture
solely for the benefit of one or more series of Notes other than such series)
for a period of 90 days after there has been given, by registered or certified
mail, to the Company by the Unsecured Trustee, or to the Company and the
Unsecured Trustee by the holders of at least 33% in principal amount of the
outstanding Notes of such series a written notice specifying such default and
requiring it to be remedied and stating that such notice is a "Notice of
Default";
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(4) either (a) the entry of an order approving a petition seeking
reorganization of the Company upon the basis of insolvency or inability to pay
debts as they mature under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any State thereof; or (b) the
appointment in any judicial proceeding upon the application of any creditor or
creditors of a trustee or a receiver of all or a substantial part of the trust
estate; and the continuance of such order or appointment unstayed and in effect
for a period of 90 days;
(5) the adjudication of the Company as a bankrupt by any court of competent
jurisdiction or the filing by the Company of a voluntary petition in bankruptcy
or the making by the Company of an assignment for the benefit of creditors or
the admission by the Company in writing of its inability to pay its debts as
they become due; the consent by the Company to the appointment in any judicial
proceeding upon the application of any creditor or creditors of a receiver or
trustee of all or a substantial part of its properties; the filing by the
Company of a petition or answer seeking reorganization or readjustment on the
basis of insolvency or inability to pay debts as they mature under the Federal
bankruptcy laws or any other applicable law or statute of the United States of
America or of any State thereof; or the filing by the Company of a petition to
take advantage of any insolvency act;
(6) any other Event of Default specified with respect to Notes of such
series; or
(7) default by the Company in the payment of principal of, or interest on,
securities issued under the Mortgage in an aggregate amount exceeding
$5,000,000, and the continuation thereof for 90 days after written notice to the
Company by the Unsecured Trustee, or to the Company and the Unsecured Trustee by
the holders of at least 33% in principal amount of the outstanding Notes of such
series a written notice specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default".
No Event of Default with respect to a series of Indenture Securities necessarily
constitutes an Event of Default with respect to the Indenture Securities of any
other series. The Unsecured Trustee may withhold notice of default (except in
payment of principal, interest or any funds for the retirement of Indenture
Securities) if it, in good faith, determines that withholding of such notice is
in the interest of the Holders of the Indenture Securities. (See Indenture,
Secs. 801 and 903.)
Either the Unsecured Trustee or the Holders of not less than 33% in principal
amount (or such lesser amount as may be provided in the case of discount
Indenture Securities) of the outstanding Indenture Securities of all defaulted
series, considered as one class, may declare the principal and interest on such
series due on default, but the Company may annul such default by effecting its
cure and paying overdue interest and principal. No Holder of Indenture
Securities may enforce the Indenture without having given the Unsecured Trustee
written notice of default, and unless the Holders of a majority of the Indenture
Securities of all defaulted series, considered as one class, shall have
requested the Unsecured Trustee to act and offered reasonable indemnity, and for
60 days the Unsecured Trustee shall have failed to act, but each Holder has an
absolute right to receive payment of principal and interest when due and to
institute suit for the enforcement of such payment. The Unsecured Trustee is not
required to risk its funds or incur any financial liability if it shall have
reasonable grounds for believing that repayment is not reasonably assured. The
Holders of a majority of the Indenture Securities of all defaulted series,
considered as one class, may direct the time, method and place of conducting any
proceedings for any remedy available to the Unsecured Trustee, or exercising any
trust or power conferred on the Unsecured Trustee, with respect to the Indenture
Securities of such series, but the Unsecured Trustee is not required to follow
such direction if not sufficiently indemnified and the Unsecured Trustee may
take any other action it deems proper which is not inconsistent with such
direction. (See Indenture, Secs. 802, 807, 808, 812 and 902.)
Evidence to be Furnished to the Unsecured Trustee. Compliance with Indenture
provisions will be evidenced by written statements of the Company's officers. An
annual certificate with reference to compliance with the covenants and
conditions of the Indenture and the absence of defaults is required to be filed
with the Unsecured Trustee. (See Indenture, Sec. 1004.)
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Modification of the Indenture. The rights of the Holders of the Indenture
Securities may be modified with the consent of the Holders of a majority of the
Indenture Securities of all series or Tranches, as defined below, affected,
considered as one class. However, certain specified rights of the Holders of
Indenture Securities may be modified without the consent of the Holders if such
modification would not be deemed to affect their interests adversely in any
material respect. In general, no modification of the terms of payment of
principal and interest, no reduction of the percentage in principal amount of
the Indenture Securities outstanding under such series required to consent to
any supplemental indenture or waiver under the Indenture, no reduction of such
percentage necessary for quorum and voting, and no modification of certain of
the provisions in the Indenture relating to supplemental indentures, waivers of
certain covenants and waivers of past defaults is effective against any Holder
of Indenture Securities without his consent. "Tranche" means a group of
Indenture Securities which are of the same series and have identical terms
except as to principal amount and/or date of issuance. (See Indenture, Art.
Twelve.)
Concerning the Indenture Trustee. The Bank of New York, New York, New York is
the trustee under the Indenture.
BOOK-ENTRY SYSTEM
For each issue of Debt Securities and New Preferred Stock subject to the
book-entry system hereinafter described, a global security representing all of
such issue will be issued to the Depository Trust Company, New York, New York
("DTC") or such other depository as may be subsequently designated
("Depository"), and registered in the name of CEDE & Co. (DTC's partnership
nominee), or such other Depository or its nominee as may be subsequently
designated.
So long as the Depository, or its nominee, is the registered owner of an
issue of the Debt Securities or New Preferred Stock, such Depository or such
nominee, as the case may be, will be considered the owner of such New Preferred
Stock or Debt Securities for all purposes under the Company's Restated Articles
of Association, as amended (the "Restated Articles of Association") or the
Mortgage or the Indenture, as the case may be, including notices and voting.
Payments of (a) dividends and other amounts payable in connection with the New
Preferred Stock and (b) principal of, and premium, if any, and interest on, such
Debt Securities will be made to the Depository or its nominee, as the case may
be, as the registered owner of such New Preferred Stock or Debt Securities.
Except as set forth below, owners of beneficial interests in such New Preferred
Stock or Debt Securities will not be entitled to have any such New Preferred
Stock or Debt Securities registered in their names, will not receive or be
entitled to receive physical delivery of such New Preferred Stock or Debt
Securities and will not be considered the owners of such New Preferred Stock or
Debt Securities under the Restated Articles of Association, the Mortgage or the
Indenture. Accordingly, each person holding a beneficial interest in such New
Preferred Stock or Debt Security must rely on the procedures of the Depository
and, if such person is not a Direct Participant (as hereinafter defined), on
procedures of the Direct Participant through which such person holds its
interest, to exercise any of the rights of the registered owner of such New
Preferred Stock or Debt Security.
The following nine paragraphs are based solely on information furnished by
DTC:
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking 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 Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfer and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by The
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others
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such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of the New Preferred Stock or the Debt Securities under the DTC
system must be made by or through Direct Participants, which will receive a
credit for the New Preferred Stock or the Debt Securities on DTC's records. The
ownership interest of each actual purchaser of each share of New Preferred Stock
or Debt Security ("Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmation providing details of the transaction, as well as
periodic statements of their holdings, from the Direct and Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the New Preferred Stock or the Debt Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the New Preferred Stock or the Debt Securities,
except in the event that use of the book-entry system for the New Preferred
Stock or the Debt Securities is discontinued.
To facilitate subsequent transfers, all New Preferred Stock or Debt
Securities deposited by Participants with DTC are registered in the name of CEDE
& Co. The deposit of New Preferred Stock or Debt Securities with DTC and their
registration in the name of CEDE & Co. effect no change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the New Preferred Stock
or Debt Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such New Preferred Stock or Debt Securities are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
If the New Preferred Stock or Debt Securities of any issue are redeemable
prior to the redemption date or maturity date, redemption notices shall be sent
to CEDE & Co. If less than all of the New Preferred Stock or Debt Securities of
any 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.
Neither DTC nor CEDE & Co. will consent or vote with respect to the New
Preferred Stock or Debt Securities. Under its usual procedures, DTC mails an
Omnibus Proxy to the Company as soon as possible after the record date. The
Omnibus Proxy assigns CEDE & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the New Preferred Stock or Debt Securities are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Dividends and other amounts payable on the New Preferred Stock and principal
and interest payments on the Debt Securities will be made to DTC. DTC's practice
is to credit Direct Participants' accounts on the date on which the dividend,
interest or other payment is payable in accordance with their respective
holdings shown on DTC's records, unless DTC has reason to believe that it will
not receive payment on such payment date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such Participant
and not of DTC, the Trustee or the Unsecured Trustee, as the case may be, or the
Company, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of dividends, principal, interest and other payments
to DTC is the responsibility of the Company and the Trustee or the Unsecured
Trustee, as the case may be. Disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing services as securities depository with respect
to the New Preferred Stock or Debt Securities at any time by giving notice to
the Company and the Trustee or the Unsecured
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Trustee, as the case may be. Under such circumstances, in the event that a
successor securities depository is not obtained, New Preferred Stock or Debt
Securities in certificated form are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event, New
Preferred Stock or Debt Securities in certificated form will be printed and
delivered.
None of the Company or the Trustee or the Unsecured Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in the New Preferred Stock or
Debt Securities or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
DESCRIPTION OF NEW PREFERRED STOCK
THE FOLLOWING IS A SUMMARY OF CERTAIN RIGHTS AND PRIVILEGES AND RESTRICTIONS
ON THE NEW PREFERRED STOCK. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE.
REFERENCE IS MADE TO THE RESTATED ARTICLES OF ASSOCIATION, AS AMENDED, AND THE
BYLAWS OF THE COMPANY, FILED AS EXHIBITS TO THE REGISTRATION STATEMENT, FOR
COMPLETE STATEMENTS. THE FOLLOWING STATEMENTS ARE QUALIFIED IN THEIR ENTIRETY BY
SUCH REFERENCES.
General. The Restated Articles of Association of the Company authorize the
issuance of Common Stock, Preferred Stock, $100 par value (the "Preferred
Stock") and Preference Stock, $100 par value (the "Preference Stock"), which
ranks junior to Preferred Stock in respect of dividends and amounts payable upon
liquidation, dissolution or winding up of the Company. As of June 30, 1996,
there were issued and outstanding 3,000 shares of Preferred Stock, Class B,
5,100 shares of Preferred Stock, Class C and 11,200 shares of Series 1 and
70,000 shares of Series 3, Preferred Stock, Class D. No shares of Preference
Stock have been issued. Of the Company's authorized Preferred Stock, the
Company's Restated Articles of Association provide for 200,000 shares of New
Preferred Stock, none of which has been issued as of the date hereof.
Shares of the New Preferred Stock may be issued from time to time, in one or
more series, as authorized by the Board of Directors of the Company. The New
Preferred Stock will, when issued, be fully paid and non-assessible and will
have no preemptive rights.
Terms. Reference is made to the Prospectus Supplement or Supplements for each
series of the New Preferred Stock for the following terms, among others, of the
New Preferred Stock offered thereby:
(1) the designation of such New Preferred Stock;
(2) the number of shares of such New Preferred Stock offered, the liquidation
preference per share and the offering price of such Preferred Stock;
(3) the dividend rate(s) or method(s) of calculation thereof applicable to
such New Preferred Stock;
(4) the provision for a sinking fund, if any, for such New Preferred Stock;
(5) the provision for redemption, if applicable, for such New Preferred
Stock;
(6) the terms and conditions, if applicable, upon which such New Preferred
Stock will be convertible into Common Stock, including the conversion price (or
manner of calculation) thereof;
(8) any other specific terms, preferences, rights, limitations or
restrictions of such New Preferred Stock;
(9) any listing of such New Preferred Stock on any Securities Exchange; and
(10) the provision for all or any portion of shares of such New Preferred
Stock to be issued to a designated depository.
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The following statements with respect to the Company's New Preferred Stock
are summaries of certain provisions of the Company's Restated Articles of
Association.
Dividend Rights. The holders of the New Preferred Stock will be entitled to
receive, when and as declared by the Board of Directors, out of any assets of
the Company available for dividends, dividends at such rates as may be
determined by the Board of Directors of the Company (and set forth in the
applicable Prospectus Supplement), payable quarterly on the first days of March,
June, September and December in each year, cumulative from the date of first
issuance. Dividends in full shall not be paid or set apart for payment on shares
of any class of Preferred Stock for any dividend period unless dividends in full
have been or are contemporaneously paid or set apart for payment on all
outstanding shares of all classes of Preferred Stock for such dividend periods
and all prior dividend periods. When the specified dividends are not paid in
full on all classes of Preferred Stock, the shares of each class of Preferred
Stock shall share ratably in the payment of dividends, including accumulations,
if any, in accordance with the sums which would be payable on said shares if all
dividends were paid in full.
There are no limitations in any indentures or other agreements on the payment
of dividends on the Preferred Stock. No dividends shall be declared or paid upon
or set apart for any security junior to the New Preferred Stock in respect of
dividends and amounts payable upon any liquidation, dissolution or winding up of
the Company ("Junior Securities") nor any sums applied to the purchase,
redemption or other retirement of any class of Junior Securities unless full
dividends on all shares of Preferred Stock of all classes outstanding, and on
all outstanding classes of securities senior to the Preferred Stock, for all
past quarterly dividend periods shall have been paid or been declared and a sum
sufficient for the payment thereof set apart and the full dividend for the then
current quarterly dividend period shall have been or concurrently shall be
declared. The amount of any deficiency for past dividend periods may be paid or
declared and set apart at any time without reference to any quarterly dividend
payment date. Unpaid accrued dividends on the Preferred Stock shall not bear
interest. See "Description of New Common Stock--Dividend Restrictions" for
additional restrictions on the payment of dividends on Common Stock and other
Junior Securities.
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary, the holders of Preferred
Stock shall be entitled to receive, for each share thereof, the par value
thereof, plus in the case such liquidation, dissolution or winding up shall have
been voluntary, an amount per share equal to the redemption premium that would
then be payable to the holder thereof if such Preferred Stock were to be
redeemed at the option of the Company, together, in each case, with accrued
dividends (whether or not declared), before any distribution of the assets shall
be made to the holders of any shares of any class of Junior Securities. The
holders of Preferred Stock shall be entitled to no further participation in such
distribution.
Redemption Provisions. If so provided in the applicable Prospectus
Supplement, the New Preferred Stock will be subject to mandatory redemption or
redemption at the option of the Company, as a whole or in part, in each case
upon terms, at the times and the redemption prices set forth in such Prospectus
Supplement. If any dividends are in arrears on any shares of Preferred Stock or
if a default exists in any sinking or purchase fund obligation provided for the
benefit of any one or more class or series of Preferred Stock, the Company may
not redeem or purchase any shares of Preferred Stock unless all of the
outstanding Preferred Stock is redeemed or an offer to purchase on a comparable
basis is made to the holders of all of the outstanding Preferred Stock, as
applicable.
Voting Rights. Holders the New Preferred Stock will not have any voting
rights except as set forth below or as otherwise from time to time required by
law or as indicated in the applicable Prospectus Supplement. With respect to any
proposal upon which any series of the New Preferred Stock is entitled, as a
series, to any vote, the holders of the shares of such series of New Preferred
Stock are entitled to one vote for each share so held.
The holders of Preferred Stock shall be entitled to vote, separately, as a
single class, for the election of the smallest number of directors necessary to
constitute a majority of the Board of Directors whenever and as often as
dividends payable on any Preferred Stock outstanding shall be in arrears in an
amount equivalent to or exceeding four (4) quarterly dividends, or for the
election of two directors in
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<PAGE>
the event of a default in any purchase or sinking fund provided for any one or
more classes or series of Preferred Stock, which rights may be exercised at any
annual meeting and at any special meeting of stockholders called for the purpose
of electing directors, until such time as arrears in dividends on the Preferred
Stock and the current dividend thereon shall have been paid or declared and set
apart for payment, and any default in such purchase or sinking fund obligations
shall have been remedied, whereupon all voting rights of the Preferred Stock as
a result of such arrearage or default shall be divested from the Preferred
Stock. Effective as of the date on which all currently outstanding shares of
Classes B, C, and Class D, Series 1 and Series 3 Preferred Stock cease to be
outstanding, the holders of Preferred Stock shall be entitled to vote,
separately, as a single class, for the election of two (2) directors whenever
and as often as dividends payable on any Preferred Stock outstanding shall be in
arrears in an amount equivalent to or exceeding four (4) quarterly dividends,
and for each subsequent election while such arrearage shall continue, that
number of directors, not exceeding the smallest number of directors necessary to
constitute a majority of the Board of Directors, equal to two (2) times the
number of full years that such arrearage shall have continued, or for the
election of two directors in the event of a default in any purchase or sinking
fund provided for any one or more classes or series of Preferred Stock, which
rights may be exercised at any annual meeting and at any special meeting of
stockholders called for the purpose of electing directors, until such time as
arrears in dividends on the Preferred Stock and the current dividend thereon
shall have been paid or declared and set apart for payment, and any default in
such purchase or sinking fund obligations shall have been remedied, whereupon
all voting rights of the Preferred Stock as a result of such arrearage or
default shall be divested from the Preferred Stock. The holders of Junior
Securities, if any, voting separately as a class or classes, will be entitled to
elect the remaining directors.
In addition, the votes or consent of the holders of specified percentages of
the Preferred Stock and Preference Stock are required as a condition to
effecting various changes in the capital structure of the Company and certain
other transactions. So long as any Preferred Stock is outstanding,
(A) the Company shall not, without the consent of the holders of at least
two-thirds of the aggregate number of shares of all classes of Preferred Stock
entitled to vote thereon (i) create or authorize, or increase the authorized
amount of any shares of any class of stock ranking as to dividends or assets
prior to the Preferred Stock, or of any obligation or security convertible into
stock ranking as to dividends or assets prior to the Preferred Stock; or (ii)
amend, change or repeal any of the express terms of the Preferred Stock
outstanding in any manner adverse to the holders thereof, except that, if such
amendment, change or repeal is adverse to the holders of less than all classes
and series of Preferred Stock, the consent of only the holders of two-thirds of
the aggregate number of shares of the classes and series thereof entitled to
vote thereon and so affected shall be required; or (iii) issue shares of
Preferred Stock in addition to the Preferred Stock, Class A, originally issued,
unless after giving effect to such additional shares (a) the Net Income of the
Company Available for Dividends (defined below) for any period of twelve (12)
consecutive calendar months within the fifteen (15) calendar months immediately
preceding the calendar month within which such additional shares of stock are to
be issued, shall have been at least two and one-half (2 1/2) times the aggregate
annual dividend requirements upon the entire amount to be outstanding of
Preferred Stock and of any stocks of the Company of any class ranking as to
dividends prior to the Preferred Stock, (b) the Gross Income of the Company
Available for Payment of Interest Charges (defined below) for any period of
twelve (12) consecutive calendar months within the fifteen (15) calendar months
immediately preceding the calendar month within which such additional shares of
stock are to be issued, shall have been at least one and one-half (1 1/2) times
the sum of (1) the aggregate annual interest charges on all indebtedness of the
Company to be outstanding, and (2) the aggregate annual dividend requirements
upon the entire amount to be outstanding of Preferred Stock and of any stocks of
the Company of any class ranking as to dividends prior to the Preferred Stock,
and (c) the Common Stock Equity (defined below) plus the aggregate of the
capital allocable to all classes of Junior Securities other than the Common
Stock shall not be less than the aggregate amount payable upon involuntary
liquidation, dissolution or winding up of the Company to the holders of shares
of all classes of Preferred Stock to be outstanding. In the foregoing
computations, there shall be excluded (a) all indebtedness and all shares of
Preferred Stock to be retired in connection with the issue of such additional
shares, and (b) all interest charges on all indebtedness and, all dividend
requirements on all
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<PAGE>
shares of stock, to be retired in connection with the issue of such additional
shares. The net earnings of any property which has been acquired by the Company
during or after the period for which income is computed, or of any property
which is to be acquired in connection with the issuance of any such additional
shares, if capable of being separately determined or estimated, may be included
on a pro forma basis in the foregoing computations; and if within or after the
period for which income is computed, any substantial portion of the properties
of the Company shall have been disposed of, the net earnings of such property,
if capable of being separately determined or estimated, shall be excluded in the
foregoing computations.
(B) The Company shall not, without the consent of the holders of a majority
of the aggregate number of shares of Preferred Stock entitled to vote thereon:
(i) issue, create, guarantee or permit to exist any unsecured securities
(whether notes, debentures of other evidences of indebtedness) evidencing
indebtedness maturing more than one year from the date of issuance, creation or
assumption thereof for any purpose, except for the purpose of refunding
outstanding unsecured securities or effecting the retirement, by redemption or
otherwise, of outstanding shares of the Preferred Stock or of a class of stock
ranking prior thereto, if immediately after such issue, creation or assumption,
the total principal amount of all such securities then to be issued would exceed
twenty percent (20%) of the aggregate of (a) the total principal amount of all
bonds and other securities representing secured indebtedness issued, created or
assumed by the Company and then to be outstanding, and (b) the total of the
capital and surplus (including premiums on capital stock) of the Company as then
to be stated on its books; provided, that any unsecured securities issued under
any authorization of holders of Preferred Stock (and any securities issued to
refund the same) shall be excluded from the computation of the amount of
unsecured securities which may be issued, created or assumed within the
aforesaid twenty percent (20%) limitation; or (ii) merge or consolidate with or
into any other corporation or corporations, provided that the consent or vote of
the holders of the Preferred Stock as aforesaid shall not be required if (1)
such consolidation and merger is with or into any public utility principally
engaged in the distribution of gas or electricity in areas in the State of
Vermont, and (2) if after giving effect to such merger or consolidation, and the
issuance and assumption of all securities to be issued or assumed in connection
with any such merger or consolidation, the ratio of the capital (including
premiums) represented by all classes of Preferred Stock of the Company or
Preferred Stock of any corporation resulting from such merger or consolidation
then to be outstanding to the total sum of (a) the Common Stock Equity of the
Company plus (b) the principal amount of all outstanding indebtedness of the
resulting corporation maturing more than twelve (12) months after the date of
issue or assumption thereof, and (c) the par value of or stated capital
represented by the outstanding shares of all classes of stock of the resulting
corporation other than common stock shall be equal to or greater than such ratio
in the case of the Company prior to such merger or consolidation; provided that
the provisions of this clause (ii) shall not apply to a purchase or other
acquisition by the Company of franchise or assets of another corporation, in any
manner which does not involve a merger or consolidation, and provided that the
provisions of this sub-paragraph (ii) shall not be deemed to alter or affect the
restrictive provisions of clause (A) or subparagraphs (i) or (iii) of this
clause (B); or (iii) sell, lease or otherwise dispose of all or substantially
all of its property to any person. Effective as of the date on which all
currently outstanding shares of Classes B, C and Class D, Series 1 and Series 3,
Preferred Stock cease to be outstanding, the provisions of (A) (iii) (a) and (B)
(i) above will cease to be effective.
For the purposes of the foregoing, the "Gross Income of the Company Available
for Payment of Interest Charges" means the total operating revenues and other
income of the Company less all proper deductions for operating expenses, taxes
and other appropriate items, including provisions for maintenance, retirements
and depreciations (but excluding interest charges and amortization of debt
premium, discount and expense) determined in accordance with sound accounting
practice. The "Net Income of the Company Available for Dividends" means the
Gross Income of the Company Available for Payment of Interest Charges less
interest charges, provided that no deduction or adjustment shall be made for the
items of expense in connection with the redemption or retirement of any
securities issued by the Company including any amount paid in excess, of the
principal amount or par value or stated value of securities redeemed or retired,
or, in the event such redemption or retirement is effected with proceeds of the
sale of other securities of the Company, interest or dividends on the securities
redeemed or
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<PAGE>
retired from the date on which the funds required for such redemption or
retirement are deposited in trust for such purpose to the date of redemption or
retirement period. "Common Stock Equity" shall mean the aggregate of the par
value, or the stated capital represented by the outstanding Common Stock of the
Company, plus the capital surplus and earned surplus of the Company and premiums
on all capital stock of the Company less any accumulated or unpaid dividends on
any outstanding Preferred Stock and any outstanding stock of any other class
ranking as to dividends prior to the Preferred Stock.
Transfer Agent and Registrar. The Transfer Agent and Registrar of the New
Preferred Stock is Chase Mellon Shareholder Services L.L.C., Ridgefield Park,
New Jersey.
DESCRIPTION OF NEW COMMON STOCK
THE FOLLOWING IS A SUMMARY OF CERTAIN RIGHTS AND PRIVILEGES AND RESTRICTIONS
ON THE COMMON STOCK. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE. REFERENCE IS
MADE TO THE RESTATED ARTICLES OF ASSOCIATION AND THE BYLAWS OF THE COMPANY AND
THE MORTGAGE, FILED AS EXHIBITS TO THE REGISTRATION STATEMENT, FOR COMPLETE
STATEMENTS. THE FOLLOWING STATEMENTS ARE QUALIFIED IN THEIR ENTIRETY BY SUCH
REFERENCES.
General. The outstanding shares of Common Stock, $3.33 1/3 par value, of the
Company are fully paid and nonassessable. The shares of the New Common Stock,
upon payment of the purchase price, will be fully paid and nonassessable.
Dividend Restrictions. No dividends may be paid on the Common Stock nor may
the Company purchase any Common Stock unless all cumulative dividends on the
Company's outstanding Preferred Stock have been paid or provided for, all
Preferred Stock purchase-fund requirements have been satisfied, full dividends
on any Preference Stock have been paid or provided for and the other
restrictions summarized below have been complied with. In addition, so long as
any shares of Preferred Stock are outstanding, the Company shall not pay any
dividends on any shares of stock junior to the Preferred Stock or make any other
distributions thereon or any expenditures for the purchase, redemption or other
retirement for a consideration of such junior stock except from net income of
the Corporation available for dividends on such junior stock accumulated
subsequent to December 31, 1954 plus the sum of $150,000.
The Mortgage provides that the Company shall not declare or pay any cash
dividend on or make any other distribution in respect of its Common Stock, or,
with certain exceptions, repurchase any capital stock of the Company if the
aggregate amount so declared, paid, distributed or expended after December 31,
1992 would exceed the aggregate amount of net income of the Company available
for dividends on its Common Stock accumulated after December 31, 1992, plus
$18,500,000. As of December 31, 1995, the amount of retained earnings available
for dividends on the Common Stock under this provision was $20,100,000.
Voting Rights. The holders of the Common Stock have exclusive voting rights
except as referred to below and as otherwise provided by law. See "DESCRIPTION
OF NEW PREFERRED STOCK -- Voting Rights" for a description of voting rights
afforded holders of Preferred Stock.
Liquidation Rights. After satisfaction of the preferential liquidation rights
of the Preferred Stock and any Preference Stock, the holders of Common Stock are
entitled to share, ratably, in the distribution of all remaining assets of the
Company. Holders of the Preferred Stock are entitled to receive $100 per share
and accrued dividends on involuntary liquidation.
Holders of any Preference Stock will be entitled to receive such amounts as
determined by the Board of Directors at the time of issuance of such Stock.
Preemptive Rights. The holders of the Common Stock have no preemptive
rights.
Anti-Greenmail, Fair Price and Business Judgment Provisions. Section 7.05 of
the Company's Restated Articles of Association is intended to prevent so-called
"greenmail". That Section prohibits the Company, in the absence of a special
shareholder approval, from purchasing any of its outstanding shares of Common
Stock at a price in excess of the fair market value of such shares from a
beneficial owner of more than five percent of the Company's Common Stock (a
"Related Person," as such term is
15
<PAGE>
more specifically defined in Section 7.06 of the Restated Articles of
Association) who has owned such shares for less than two years, subject to
certain limited exceptions. The special shareholder approval required by Section
7.05 is the greater of eighty percent of the voting power of the Company, or the
sum of the number of shares owned by the Related Person plus a majority of the
voting power of the Company not beneficially owned by the Related Person.
Section 7.06 of the Company's Restated Articles of Association is a
fair-price provision that is designed to provide reasonable assurance that any
attempt to acquire the Company will be made only on terms that are fair to all
shareholders. That Section requires that mergers and certain other Business
Combinations (as defined below) involving the Company and a Related Person,
unless approved by a majority of the Directors who are unaffiliated with such
Related Person, must be approved by at least eighty percent of the voting power
of the Company, as compared to the two-thirds vote required by Vermont law, and
satisfy certain minimum-price, form-of-consideration and procedural
requirements.
Section 7.07 of the Company's Restated Articles of Association is a business
judgment provision that requires that the Board of Directors, in evaluating any
proposal for a merger or Business Combination involving the Company, take into
consideration certain relevant factors, including the impact of any such
transaction on the Company's suppliers, customers and employees, that might not
otherwise be considered. For the purposes of Sections 7.06 and 7.07, a "Business
Combination," in general, includes the following transactions: (1) a merger or
consolidation of the Company or any subsidiary with a Related Person or certain
affiliates or associates of the Related Person; (2) the sale or other
disposition by the Company or a subsidiary of assets having an aggregate fair
market value of $5,000,000 or more, or the use thereof in certain financial
arrangements, if a Related Person is a party to the transaction; (3) the
issuance or transfer (other than on a pro rata basis to all shareholders) of
stock or other securities of the Company or of a subsidiary to a Related Person
or affiliates or associates of the Related Person; (4) the adoption of any plan
or proposal for the liquidation or dissolution of the Company proposed by or on
behalf of or voted for or consented to by any Related Person or any affiliates
or associates thereof; (5) any reclassification of securities, recapitalization,
merger or consolidation with a subsidiary or other transaction that has the
effect, directly or indirectly, of increasing the percentage of the outstanding
stock of any class of the Company or a subsidiary owned by a Related Person or
any affiliate or associate thereof; or (6) any similar transaction of similar
purpose or effect or any agreement, contract or other arrangement providing for
any one or more of the foregoing actions. The Restated Articles of Association
provide that any amendment to Sections 7.06 and 7.07 must be approved by at
least eighty percent of the voting power of the Company, unless such amendment
has been recommended by a majority of the members of the Board of Directors who
are not Related Persons, and who are unaffiliated with a Related Person and
became Directors of the Company prior to the time that a Related Person became
such.
Staggered Board of Directors. The Company's By-laws provide that the members
of the Company's Board of Directors are elected for three year terms, with
one-third of the members of the Board of Directors elected each year.
Transfer Agent and Registrar. The Transfer Agent and Registrar is Chase
Mellon Shareholder Services L.L.C., Ridgefield Park, New Jersey.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through underwriters; (ii) through
dealers; (iii) directly to one or more institutional purchasers; or (iv) through
agents. Securities may be sold outside the United States. An accompanying
Prospectus Supplement or Supplements will set forth the terms of each offering
of the Securities including the name or names of any underwriters, dealers,
purchasers or agents, the purchase price of such Securities and the proceeds to
the Company from such sale, any underwriting discounts and other items
constituting underwriters' or agents' compensation, any initial public offering
price, any discounts or concessions allowed or reallowed or paid to dealers and
any securities exchanges on which such Securities may be listed. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time. Only firms named in the
Prospectus Supplement are deemed to be underwriters, dealers or agents in
connection with the Securities offered thereby.
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<PAGE>
If underwriters are used in the sale, Securities will be acquired by the
underwriters for their own account and may be resold 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. Unless otherwise set
forth in the Prospectus Supplement, the obligations of the underwriters to
purchase the Securities will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all such Securities if any are
purchased.
Securities may be sold directly by the Company or through any firm designated
by the Company from time to time, acting as principal or as agent. The
Prospectus Supplement will set forth the name of any dealer or agent involved in
the offer or sale of the Securities in respect of which the Prospectus
Supplement is delivered and the price payable to the Company by such dealer or
any commissions payable by the Company to such agent. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a reasonable
efforts basis for the period of its appointment.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribution with respect to payments for such liabilities which underwriters,
dealers or agents may be required to make. Underwriters, dealers and agents may
engage in transactions with or perform services for the Company in the ordinary
course of business.
The anticipated date of delivery of Securities will be as set forth in the
Prospectus Supplement or Supplements relating to such offering.
LEGAL OPINIONS AND EXPERTS
The legality of the Securities offered hereby is being passed upon for the
Company by Hunton & Williams, 200 Park Avenue, 43rd Floor, New York, New York
10166, special counsel for the Company, and by either Peter H. Zamore, Esq.,
General Counsel of the Company, or Michael H. Lipson, Esq., Assistant General
Counsel of the Company, and for the underwriters, dealers or agents by Reid &
Priest LLP, 40 West 57th Street, New York, New York 10019. Hunton & Williams and
Reid & Priest LLP will rely on the opinions of Peter H. Zamore, Esq. or Michael
H. Lipson, Esq., as the case may be, as to matters of Vermont law.
The audited consolidated financial statements and schedules of the Company
for the period ended December 31, 1995, included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1995, which are incorporated in
this Prospectus by reference, have been examined by Arthur Andersen LLP,
independent certified public accountants, as set forth in their report dated
January 29, 1996, with respect thereto, and are included in this Prospectus,
through incorporation by reference, in reliance upon the report of such firm and
their authority as experts in accounting and auditing.
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No dealer, salesperson or any other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus Supplement or the Prospectus or the documents incorporated by
reference therein, in connection with the offer contained in this Prospectus
Supplement and the Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or by the Underwriter. Neither this Prospectus Supplement nor the Prospectus
constitutes an offer of any securities other than those to which it relates or
an offer to sell, or a solicitation of an offer to buy, in any state to any
person to whom it is not lawful to make such offer in such state. The delivery
of this Prospectus Supplement or the Prospectus at any time does not imply that
the information contained in either is correct as of any time subsequent to its
date.
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TABLE OF CONTENTS
PAGE
---------
Prospectus Supplement
Summary Financial Information .......................................... S-2
The Company ............................................................ S-3
Terms of the New Preferred Stock ....................................... S-3
Use of Proceeds ........................................................ S-6
Underwriting ........................................................... S-6
Prospectus
Available Information .................................................. 2
Incorporation of Certain Documents
by Reference ........................................................... 2
The Company ............................................................ 2
Coverage Ratios ........................................................ 3
Use of Proceeds and Financing Program .................................. 3
Description of the New Bonds ........................................... 3
Description of the Notes ............................................... 7
Book-Entry System ...................................................... 9
Description of New Preferred Stock ..................................... 11
Description of New Common Stock ........................................ 15
Plan of Distribution ................................................... 16
Legal Opinions and Experts ............................................. 17
<PAGE>
120,000 SHARES
[LOGO]
GREEN MOUNTAIN POWER
CORPORATION
% PREFERRED STOCK, CLASS E, SERIES 1
($100 PAR VALUE)
------------------
PROSPECTUS SUPPLEMENT
, 1996
------------------
SMITH BARNEY INC.
