<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Consent Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
NEW YORK STATE ELECTRIC & GAS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[NYSEG Letterhead]
, 1999
Dear Shareholder:
Enclosed is important information relating to the following two items:
(i) an offer by New York State Electric & Gas Corporation (the "Company") to
purchase all of the outstanding shares of certain series of its serial
preferred stock; and
(ii) a companion proposal of the Company to increase the amount of unsecured
indebtedness the Company may issue.
We would greatly appreciate your giving prompt attention to the enclosed
material which you are urged to read in its entirety.
The Company is offering to purchase all of the outstanding shares of the
series of its serial preferred stock listed on the front cover page of the
enclosed Offer to Purchase and Consent Statement. NONE OF THE COMPANY, ITS BOARD
OF DIRECTORS, NOR ANY OF ITS OFFICERS MAKES ANY RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER TO TENDER SHARES. EACH SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
The Company's Restated Certificate of Incorporation, as amended, currently
restricts the ability of the Company to issue unsecured indebtedness without the
approval of the serial preferred shareholders. This restriction limits the
Company's flexibility in planning, financing and refinancing its business
activities. As competition has intensified in the utility industry, financial
flexibility and financial cost structure has become increasingly important for
the success of the Company. The proposal, as set forth and explained in the
enclosed material, would allow the Company to issue $ of unsecured
indebtedness in excess of unsecured indebtedness presently authorized, permitted
or previously consented to. We believe that approval of the proposal will play
an important role in increasing the financial flexibility and improving the
financial cost structure of the Company.
You must grant your consent to the proposal in order to tender shares. The
Company's offer is conditioned upon, among other things, the proposal being
approved by the necessary votes of the serial preferred shareholders.
If you grant your consent to the proposal and do not tender your shares and
the proposal is approved by the serial preferred shareholders, you will be
entitled to receive a special cash payment in an amount equal to $ for each
share with respect to which your consent is granted and not tendered. If you
tender your shares, and the shares are accepted for payment, you will receive
the applicable purchase price per share but will not be entitled to the special
cash payment. Instructions for tendering your shares and information pertaining
to the special cash payment is included in the enclosed material.
The record date for determining serial preferred shareholders entitled to
grant a consent with respect to the consent solicitation is , 1999. It
is important that you grant your consent to the proposal, regardless of the
number of shares you own. You are requested to return your consent, which is
included within the accompanying Letter of Transmittal and Consent, by
, 1999.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU GRANT YOUR CONSENT TO THE
PROPOSAL.
If you have any questions regarding the consent solicitation or the
Company's offer to purchase shares, please call Salomon Smith Barney, the Dealer
Manager, at (800) 558-3745, Georgeson & Company, Inc., the Information Agent, at
(800) 223-2064, or your broker, dealer, commercial bank or trust company.
Thank you for your continued interest in the Company.
Sincerely,
Sherwood J. Rafferty
Senior Vice President and
Chief Financial Officer
<PAGE>
OFFER TO PURCHASE AND CONSENT STATEMENT
NEW YORK STATE ELECTRIC & GAS CORPORATION
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING
SERIES OF ITS SERIAL PREFERRED STOCK, PAR VALUE $100 PER SHARE,
AT THE FOLLOWING PURCHASE PRICES
<TABLE>
<CAPTION>
SERIES CUSIP NO. PURCHASE PRICE
- --------- ------------- -----------------
<C> <S> <C> <C>
3.75% Cumulative Preferred Stock 649840-20-4 $
4 1/2% Cumulative Preferred Stock (Series 1949) 649840-70-9 $
4.40% Cumulative Preferred Stock 649840-40-2 $
4.15% Cumulative Preferred Stock (Series 1954) 649840-50-1 $
4.15% Cumulative Preferred Stock 649840-2-* $
</TABLE>
------------------------
NEW YORK STATE ELECTRIC & GAS CORPORATION
CONSENT STATEMENT WITH RESPECT TO THE ABOVE-LISTED
SERIES OF ITS SERIAL PREFERRED STOCK
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
New York State Electric & Gas Corporation (the "Company"), a New York
corporation and a subsidiary of Energy East Corporation ("EEC"), invites the
holders of shares (the "Shares") of the series of serial preferred stock listed
above (each a "Series of Preferred," and a holder thereof, a "Preferred
Shareholder") of the Company, to tender any and all of their Shares for purchase
at the purchase price per Share listed above, net to the seller in cash, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
Consent Statement and in the accompanying Letter of Transmittal and Consent
(which together constitute the "Offer"). The Company will purchase any and all
Shares validly tendered and not withdrawn, upon the terms and subject to the
conditions set forth in the Offer. See "Terms of the Offer."
Concurrently with the Offer, the Board of Directors of the Company is
soliciting consents (the "Consent Solicitation") from the holders of the
Company's outstanding serial preferred stock (which consists of each Series of
Preferred included in this Offer, together with the Company's 6.30% Serial
Preferred Stock (Cumulative, $100 Par Value) (the "6.30% Series")) in connection
with a proposal to permit the issuance by the Company of up to $ of unsecured
indebtedness in excess of all other unsecured indebtedness presently authorized,
permitted or previously consented to (the "Proposal"). See "Proposal and Consent
Solicitation." The 6.30% Series and each of the Series of Preferred included in
this Offer are referred to collectively as the "Outstanding Serial Preferred
Stock." THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE APPROVAL OF THE
PROPOSAL BY HOLDERS OF AT LEAST A MAJORITY OF THE VOTES OF SHARES OF THE
OUTSTANDING SERIAL PREFERRED STOCK ENTITLED TO BE CAST, CONSIDERED TOGETHER AS
ONE CLASS. THE OFFER FOR ANY ONE SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY
MINIMUM NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS
INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. SEE "TERMS OF THE
OFFER--NUMBER OF SHARES; PURCHASE PRICES" AND "TERMS OF THE OFFER--CONDITIONS OF
THE OFFER."
PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER
MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED CONSENT TO THE PROPOSAL.
HOWEVER, IT IS NOT NECESSARY TO TENDER SHARES IN ORDER TO CONSENT TO THE
PROPOSAL.
In order to validly tender Shares pursuant to the Offer, Preferred
Shareholders who become holders of record of Shares after , 1999
(the "Record Date") and who wish to tender such Shares must obtain and submit
with their tender an irrevocable proxy from the holder of record of such Shares
as of the Record Date in order to grant their consent to the Proposal. In order
to facilitate receipt of consents, the Shares of each Series of Preferred will
trade "with proxy" in the over-the-counter market (the "OTC") and on the New
York Stock Exchange (the "NYSE"), as applicable. Settlement of all trades after
the Record Date should include an irrevocable proxy from the holder of record as
of the Record Date. See "Terms of the Offer--Procedure for Tendering Shares."
(COVER CONTINUED ON NEXT PAGE)
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON SMITH BARNEY
, 1999
<PAGE>
IF, BUT ONLY IF, A PREFERRED SHAREHOLDER CONSENTS TO THE PROPOSAL WITH
RESPECT TO SHARES BUT DOES NOT TENDER THOSE SHARES PURSUANT TO THE OFFER AND THE
PROPOSAL IS APPROVED, THE COMPANY WILL MAKE A SPECIAL CASH PAYMENT TO SUCH
PREFERRED SHAREHOLDER IN AN AMOUNT EQUAL TO $ FOR EACH SUCH SHARE (THE
"SPECIAL CASH PAYMENT"). THOSE PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR
SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED ABOVE AND
WILL NOT BE ENTITLED TO THE SPECIAL CASH PAYMENT. SEE "PROPOSAL AND CONSENT
SOLICITATION."
------------------------
The Company will pay a solicitation fee for Shares tendered, accepted for
payment and paid pursuant
to the Offer and for Shares with respect to which a consent is granted but which
are not tendered pursuant to the Offer, subject to certain conditions. See "Fees
and Expenses."
------------------------
NONE OF THE COMPANY, ITS BOARD OF DIRECTORS, NOR ANY OF ITS OFFICERS MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER SHARES. EACH
PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER
SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT
PREFERRED SHAREHOLDERS GRANT THEIR CONSENT TO THE PROPOSAL.
------------------------
THIS OFFER TO PURCHASE AND CONSENT STATEMENT IS FIRST BEING MAILED ON OR ABOUT
, 1999.
THE RECORD DATE WITH RESPECT TO THE CONSENT SOLICITATION IS ,
1999.
------------------------
THE 3.75% CUMULATIVE PREFERRED STOCK IS LISTED ON THE NYSE. EACH OTHER
SERIES OF PREFERRED IS TRADED IN THE OTC AND IS NOT LISTED ON ANY NATIONAL
SECURITIES EXCHANGE. MARKET PRICE INFORMATION FOR EACH SERIES OF PREFERRED IS
SET FORTH IN THIS DOCUMENT UNDER THE CAPTION "PRICE RANGE OF SHARES; DIVIDENDS."
PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES OF ANY SERIES OF PREFERRED PURSUANT TO THE OFFER. NO PERSON HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED
LETTER OF TRANSMITTAL AND CONSENT. IF GIVEN OR MADE, SUCH RECOMMENDATION AND
SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
IMPORTANT
A Preferred Shareholder whose Shares are held by a broker, dealer,
commercial bank, trust company or nominee must contact such broker, dealer,
commercial bank, trust company or nominee if he or she desires to tender, or to
consent to the Proposal without tendering, Shares. Any Preferred Shareholder
desiring to accept the Offer and tender all or any portion of his or her Shares
and consent to the Proposal with respect to such Shares, or to consent to the
Proposal without tendering Shares, must complete and sign the applicable Letter
of Transmittal and Consent in accordance with the instructions in such Letter of
Transmittal and Consent, mail or deliver the same and any other required
documents to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") at one
of the addresses set forth on the back cover of this document, and, if tendering
Shares, deliver the certificates for such Shares to the Depositary, along with
the applicable Letter of Transmittal and Consent, or tender such Shares pursuant
to the procedure for book-entry transfer set forth herein on or prior to the
Expiration Date. Although tenders of Shares via book-entry transfer will be
effected through the Automated Tender Offer Program ("ATOP") of The Depository
Trust Company ("DTC"), all such tenders must be accompanied by a properly
completed Letter of Transmittal and Consent.
Preferred Shareholders who become holders of record of Shares after the
Record Date and who wish to tender their Shares must obtain and submit with
their tender an irrevocable proxy from the holder of record of such Shares as of
the Record Date in order to grant their consent to the Proposal.
Any Preferred Shareholder who desires to tender his or her Shares and whose
certificates for such Shares are not immediately available, or who cannot comply
in a timely manner with the procedure for book-entry transfer, should tender
such Shares by following the procedures for guaranteed delivery set forth below
under "Terms of the Offer--Procedure for Tendering Shares."
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND CONSENT.
FAILURE TO USE THE APPLICABLE LETTER OF TRANSMITTAL AND CONSENT WILL CAUSE A
TENDER AND/OR CONSENT TO BE INVALID. FOR YOUR CONVENIENCE, THE LETTERS OF
TRANSMITTAL AND CONSENT HAVE BEEN COLOR-CODED AS FOLLOWS:
<TABLE>
<CAPTION>
SERIES COLOR
- ------------------------------------------------------ ---------
<S> <C>
3.75% Cumulative Preferred Stock
4 1/2% Cumulative Preferred Stock (Series 1949)
4.40% Cumulative Preferred Stock
4.15% Cumulative Preferred Stock (Series 1954)
4.15% Cumulative Preferred Stock
</TABLE>
The same Letter of Transmittal and Consent may not be used to tender Shares
and to grant consent with respect to Shares which are not being tendered. A
Preferred Shareholder tendering a portion of his or her Shares and granting a
consent with respect to other Shares without tendering such Shares must submit
two separate Letters of Transmittal and Consent, one with respect to the
tendered Shares and one with respect to the Shares for which a consent is
granted but which are not tendered.
Questions or requests for assistance may be directed to Georgeson & Company,
Inc. (the "Information Agent") or to Salomon Smith Barney Inc. ("Salomon Smith
Barney" or the "Dealer Manager") at their respective telephone numbers and
addresses as set forth on the back cover of this document. Requests for
additional copies of this document, the applicable Letter of Transmittal and
Consent or other tender offer or consent materials should be directed to the
Information Agent, and such copies will be furnished promptly at the Company's
expense. Preferred Shareholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary....................................................................................................
Terms of the Offer.........................................................................................
Number of Shares; Purchase Prices........................................................................
Expiration Date; Extension of Tender Period..............................................................
Procedure for Tendering Shares...........................................................................
Withdrawal Rights........................................................................................
Acceptance of Shares for Payment and Payment of Purchase Price...........................................
Conditions of the Offer..................................................................................
Termination; Amendments..................................................................................
Proposal and Consent Solicitation..........................................................................
Introduction.............................................................................................
Special Cash Payments....................................................................................
Record Date; Voting Securities; Required Vote............................................................
Consents.................................................................................................
Procedural Instructions..................................................................................
Revocation of Consents...................................................................................
Appraisal Rights.........................................................................................
Cost of Solicitation.....................................................................................
Security Ownership of Certain Beneficial Owners and Management...........................................
Reasons for the Proposal; Certain Effects of the Proposal................................................
Price Range of Shares; Dividends...........................................................................
Purpose of the Offer; Certain Effects of the Offer.........................................................
Rating Agencies............................................................................................
Certain Federal Income Tax Considerations..................................................................
Tax Considerations for Tendering Preferred Shareholders..................................................
Tax Considerations for Non-Tendering Preferred Shareholders..............................................
Backup Withholding.......................................................................................
Source and Amount of Funds.................................................................................
Transactions and Agreements Concerning the Shares..........................................................
Fees and Expenses..........................................................................................
Certain Information Regarding the Company..................................................................
Summary of Financial Information...........................................................................
Incorporation of Additional Information....................................................................
Miscellaneous..............................................................................................
</TABLE>
ii
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC DETAILS CONTAINED IN
THIS DOCUMENT AND THE RELATED LETTER OF TRANSMITTAL AND CONSENT AND ANY
AMENDMENTS OR SUPPLEMENTS HERETO OR THERETO. PREFERRED SHAREHOLDERS ARE URGED TO
READ THIS DOCUMENT AND THE RELATED LETTER OF TRANSMITTAL AND CONSENT IN THEIR
ENTIRETY. EACH OF THE CAPITALIZED TERMS USED IN THIS SUMMARY AND NOT DEFINED
HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN THIS DOCUMENT.
THE COMPANY
The Company is a combination electric and gas utility company engaged in the
business of transmitting and delivering electricity, transporting and delivering
natural gas and generating electricity from its nuclear and hydroelectric
stations. The service territory, most of which is located outside the corporate
limits of cities, is in the central, eastern and western parts of the State of
New York. The service territory has an area of approximately 19,800 square miles
and a population of approximately 2,400,000. The mailing address of the
principal executive office of the Company is P.O. Box 3287, Ithaca, New York,
14852-3287, and the telephone number is (607) 347-4131.
THE OFFER
<TABLE>
<S> <C>
Series of Preferred Subject to the All outstanding Shares of 3.75% Cumulative
Offer.................................. Preferred Stock, par value $100 per share (the
"3.75% Series")
All outstanding Shares of 4 1/2% Cumulative
Preferred Stock (Series 1949), par value $100
per share (the "4 1/2% Series")
All outstanding Shares of 4.40% Cumulative
Preferred Stock, par value $100 per share (the
"4.40% Series")
All outstanding Shares of 4.15% Cumulative
Preferred Stock (Series 1954), par value $100
per share (the "4.15% (1954) Series")
All outstanding Shares of 4.15% Cumulative
Preferred Stock, par value $100 per share (the
"4.15% Series")
The Purchase Prices...................... $ per share for the 3.75% Series
$ per share for the 4 1/2% Series
$ per share for the 4.40% Series
$ per share for the 4.15% (1954) Series
$ per share for the 4.15% Series
Expiration Date.......................... With respect to each Series of Preferred, the
Offer expires on the later of 12:00 midnight,
New York City time, on , 1999, or the
latest time and date to which the Offer with
respect to such Series of Preferred is extended
(the "Expiration Date").
Purpose of the Offer..................... The Company believes that the purchase of the
Shares and approval of the Proposal will provide
the Company the flexibility to obtain financing
on terms more advantageous to the Company than
would otherwise be the case. In addition, the
Offer gives Preferred Shareholders the
opportunity to sell their Shares at a price
which the Company believes to be a premium to
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
generally prevailing market prices on the date
of the announcement of the Offer without the
usual transaction costs associated with a market
sale. The Company expects to cancel any Shares
purchased pursuant to the Offer and restore such
Shares to the status of authorized but unissued
shares. See "Purpose of the Offer; Certain
Effects of the Offer."
Dividends................................ The April 1999 dividend has been declared on the
Company's Outstanding Serial Preferred Stock,
payable on April 1, 1999 to holders of record on
March 10, 1999. A Preferred Shareholder who is
entitled to receive the April 1999 dividend will
receive such dividend even if he or she tenders
Shares prior to March 10, 1999. Tendering
Preferred Shareholders whose Shares are
purchased pursuant to the Offer will not be
entitled to any dividends in respect of any
later dividend periods (or any portion thereof).
Conditions............................... The Offer is conditioned on the approval of the
Proposal by holders of at least a majority of
the votes of shares of the Outstanding Serial
Preferred Stock entitled to be cast, considered
together as one class. The Offer is also subject
to certain other conditions. See "Terms of the
Offer--Conditions of the Offer."
Independent Offer........................ The Offer for any one Series of Preferred is
independent of the Offer for any other Series of
Preferred. The Offer is not conditioned upon the
tender of a minimum number of Shares of any
Series of Preferred.
Consent Requirement...................... Preferred Shareholders who wish to tender their
Shares must grant their consent to the Proposal.
Preferred Shareholders who become holders of
record of Shares after the Record Date and who
wish to tender such Shares must obtain and
submit with their tender an irrevocable proxy
from the holder of record of such Shares as of
the Record Date in order to grant their consent
to the Proposal.
How to Tender Shares..................... A Preferred Shareholder whose Shares are held by
a broker, dealer, commercial bank, trust company
or nominee must contact such broker, dealer,
commercial bank, trust company or nominee if he
or she desires to tender, or to consent to the
Proposal without tendering, such Shares. Any
Preferred Shareholder desiring to accept the
Offer and tender all or any portion of his or
her Shares must complete and sign the applicable
Letter of Transmittal and Consent, in accordance
with the instructions in such Letter of
Transmittal and Consent, mail or deliver the
same and any other required documents to the
Depositary, and, either (i) deliver the
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
certificates for such Shares to the Depositary,
along with the applicable Letter of Transmittal
and Consent, or (ii) tender such Shares pursuant
to the procedure for book-entry transfer set
forth herein on or prior to the Expiration Date.
Although tenders of Shares via book-entry
transfer will be effected through DTC's ATOP
system, all such tenders must be accompanied by
a properly completed Letter of Transmittal and
Consent. The same Letter of Transmittal and
Consent may not be used to tender Shares and to
grant consent with respect to Shares which are
not being tendered. A Preferred Shareholder
tendering a portion of his or her Shares and
granting a consent with respect to other Shares
without tendering such Shares must submit two
separate Letters of Transmittal and Consent, one
with respect to the tendered Shares and one with
respect to the Shares for which a consent is
granted but which are not tendered. See "Terms
of the Offer--Procedure for Tendering Shares."
Guaranteed Delivery...................... Any Preferred Shareholder who desires to tender
his or her Shares and whose certificates for
such Shares are not immediately available, or
who cannot comply in a timely manner with the
procedure for book-entry transfer, should tender
such Shares by following the procedures for
guaranteed delivery set forth below under "Terms
of the Offer--Procedure for Tendering Shares."
Withdrawal Rights........................ Tendered Shares may be withdrawn at any time
until the Expiration Date with respect to such
Series of Preferred and, unless previously
accepted for payment, may also be withdrawn
after , 1999. The consent accompanying any
tendered Shares that are withdrawn will not be
considered revoked unless the Preferred
Shareholder specifically revokes such consent as
described herein. See "Terms of the
Offer--Withdrawal Rights."
Stock Transfer Tax....................... Except as described herein, the Company will pay
or cause to be paid any stock transfer taxes
with respect to the sale and transfer of any
Shares to it or its order pursuant to the Offer.
See "Terms of the Offer-- Acceptance of Shares
for Payment and Payment of Purchase Price" and
Instruction 6 of the applicable Letter of
Transmittal and Consent.
Brokerage Commissions.................... No brokerage commissions will be payable by
Preferred Shareholders in connection with the
Offer.
Solicitation Fees........................ The Company will pay a solicitation fee to
Soliciting Dealers (as hereinafter defined) of
$1.50 per Share for Shares that are tendered,
accepted for payment and
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
paid for pursuant to the Offer (except that for
transactions for beneficial owners whose
ownership equals or exceeds 2,500 Shares, the
Company will pay a solicitation fee of $1.00 per
Share). A Soliciting Dealer will not be entitled
to a solicitation fee for Shares beneficially
owned by such Soliciting Dealer. See "Fees and
Expenses."
THE CONSENT SOLICITATION
The Proposal............................. Concurrently with the Offer, the Board of
Directors of the Company is soliciting consents
from the holders of the Company's Outstanding
Serial Preferred Stock in connection with the
Proposal to permit the issuance by the Company
of up to $ of unsecured indebtedness in
excess of all other unsecured indebtedness
presently authorized, permitted or previously
consented to under the Company's Restated
Certificate of Incorporation, as amended (the
"Charter"). The Company believes that the
ability to issue additional unsecured
indebtedness will provide the Company the
flexibility to obtain financing on terms more
advantageous to the Company than would otherwise
be the case. The Proposal will become effective
when duly completed, valid and unrevoked
consents are received from the holders of at
least a majority of the votes of shares of the
Outstanding Serial Preferred Stock entitled to
be cast. Consents in respect of Shares tendered
will not be deemed to be received until such
Shares are purchased and paid for pursuant to
the Offer. See "Proposal and Consent
Solicitation-- Reasons for the Proposal; Certain
Effects of the Proposal."
Record Date.............................. , 1999.
Who May Consent.......................... Preferred Shareholders who are the holders of
record as of the Record Date with respect to
shares of the Company's Outstanding Serial
Preferred Stock, or who have obtained an
irrevocable proxy from such holders, may grant
their consent to the Proposal regardless of
whether they tender Shares.
Special Cash Payment..................... If, but only if, a Preferred Shareholder
consents to the Proposal with respect to Shares
but does not tender those Shares pursuant to the
Offer and the Proposal is approved, the Company
will make the Special Cash Payment to such
Preferred Shareholder in an amount equal to
$ for each such Share. Those Preferred
Shareholders who validly tender their Shares
will be entitled only to the purchase price per
Share specified herein and will not be entitled
to the Special Cash Payment.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
How to Consent........................... Preferred Shareholders who wish to consent to
the Proposal but not tender Shares pursuant to
the Offer, must complete the portion of the
applicable Letter of Transmittal and Consent
with respect to the granting of the consent, in
accordance with the instructions in the
applicable Letter of Transmittal and Consent,
but should not send certificates or effect a
book-entry transfer of their Shares. Preferred
Shareholders who wish to tender their Shares
pursuant to the Offer must grant their consent
by completing the applicable Letter of
Transmittal and Consent. The same Letter of
Transmittal and Consent may not be used to
tender Shares and to grant consent with respect
to Shares which are not being tendered. A
Preferred Shareholder tendering a portion of his
or her Shares and granting a consent with
respect to other Shares without tendering such
Shares must submit two separate Letters of
Transmittal and Consent, one with respect to the
tendered Shares and one with respect to the
Shares for which a consent is granted but which
are not tendered. See "Proposal and Consent
Solicitation--Procedural Instructions."
Payment Date............................. Promptly after approval of the Proposal.
Revocation of Consents................... Executed consents may be revoked at any time
prior to the time that the Proposal becomes
effective, provided that a written, dated
revocation which clearly identifies the consent
being revoked is executed and delivered to the
Depositary at the address set forth on the back
cover of this document. A revocation may be in
any written form validly signed by the record
holder as of the Record Date as long as it
clearly states that the consent previously given
is no longer effective.
Solicitation Fee......................... If the Proposal is approved, the Company will
pay a solicitation fee to Soliciting Dealers of
$.50 per Share for Shares that are not tendered
pursuant to the Offer but in respect of which a
consent is granted.
QUESTIONS AND INFORMATION
Information Agent........................ Questions regarding how to tender and consent
and requests for additional copies of this
document and the applicable Letter of
Transmittal and Consent should be directed to
Georgeson & Company, Inc., the Information
Agent, at (800) 223-2064 (toll free) or at its
address on the back cover hereof.
Dealer Manager........................... Questions regarding the terms of the Offer and
the Consent Solicitation should be directed to
Salomon Smith Barney, the Dealer Manager for the
Offer and Solicitation Agent for the Consent
Solicitation at (800) 558-3745 or at its address
on the back cover hereof.
</TABLE>
5
<PAGE>
TERMS OF THE OFFER
NUMBER OF SHARES; PURCHASE PRICES
Upon the terms and subject to the conditions described herein and in the
applicable Letter of Transmittal and Consent, the Company will purchase any and
all Shares that are validly tendered on or prior to the Expiration Date (and not
properly withdrawn in accordance with "Terms of the Offer-- Withdrawal Rights")
at the purchase price per Share listed below, net to the seller in cash:
$ per share for the 3.75% Series
$ per share for the 4 1/2% Series
$ per share for the 4.40% Series
$ per share for the 4.15% (1954) Series
$ per share for the 4.15% Series
On , 1999, there were issued and outstanding 150,000
shares of the 3.75% Series; 40,000 shares of the 4 1/2% Series; 55,200 shares of
the 4.40% Series; 35,200 shares of the 4.15% (1954) Series; and 14,000 shares of
the 4.15% Series.
The Offer is conditioned upon, among other things, the approval of the
Proposal by holders of at least a majority of the votes of shares of the
Outstanding Serial Preferred Stock entitled to be cast, considered together as
one class. The Offer is subject to certain other conditions. The Offer for any
one Series of Preferred is not conditioned upon any minimum number of shares of
such Series of Preferred being tendered and is independent of the Offer for any
other Series of Preferred. See "Terms of the Offer-- Conditions of the Offer."
The Offer is being sent to all persons in whose names Shares are registered
on the books of the Company as of the close of business on ,
1999 as well as to all persons in whose names Shares are registered on the books
of the Company as of the Record Date. No record date is fixed for determining
which persons are permitted to tender Shares. However, only the holders of
record as of the Record Date, or Preferred Shareholders who acquire an
irrevocable proxy from such record holders, are permitted to grant their consent
to the Proposal and, accordingly, only such Preferred Shareholders may validly
tender Shares pursuant to the Offer.
NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED AND NO
TENDERS WILL BE ACCEPTED IN RESPECT OF SHARES FOR WHICH A CONSENT TO THE
PROPOSAL HAS NOT BEEN GRANTED. SUCH CONSENT IS GRANTED BY PROPERLY COMPLETING
THE FORM OF CONSENT THAT IS A PART OF THE APPLICABLE LETTER OF TRANSMITTAL AND
CONSENT.
EXPIRATION DATE; EXTENSION OF TENDER PERIOD
With respect to each Series of Preferred, the Expiration Date for the Offer
is the later of 12:00 midnight, New York City time, on , 1999,
or the latest time and date to which the Offer with respect to such Series of
Preferred is extended.
The Company expressly reserves the right, in its sole discretion, and at any
time and/or from time to time, to extend the period of time during which the
Offer for any Series of Preferred is open by giving oral or written notice of
such extension to the Depositary and by making a public announcement thereof,
without extending the period of time during which the Offer for any other Series
of Preferred is open. During any such extension, all Shares of the subject
Series of Preferred previously tendered will remain subject to the Offer, except
to the extent that such Shares may be withdrawn as set forth in "Terms of the
Offer--Withdrawal Rights." There is no assurance whatsoever that the Company
will exercise its right to extend the Offer for any Series of Preferred. The
Company may decide, in its sole discretion, to
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<PAGE>
(i) decrease the number of Shares of any Series of Preferred being sought, (ii)
increase or decrease the consideration offered in the Offer to holders of such
Series of Preferred or (iii) increase or decrease the Soliciting Dealers' fees.
If, at the time that notice of such increase or decrease is first published,
sent or given to holders of such Series of Preferred in the manner specified
herein and the Offer for such Series of Preferred is scheduled to expire at any
time earlier than the tenth business day from the date that such notice is first
published, sent or given, then such Offer will be extended until at least the
expiration of such ten business day period. The Company may be required to
extend the Offer if certain other material changes are made. See "Terms of the
Offer--Termination; Amendments." For purposes of the Offer, a "business day"
means any day other than a Saturday, Sunday or federal holiday and consists of
the time period from 12:01 a.m. through 12:00 midnight, New York City time.
PROCEDURE FOR TENDERING SHARES
TENDERING SHARES. To validly tender Shares pursuant to the Offer, Preferred
Shareholders must either:
(a) send to the Depositary, or arrange for the Depositary to receive,
prior to the Expiration Date (at one of its addresses set forth on the back
cover of this document), a properly completed and duly executed Letter of
Transmittal and Consent together with any required signature guarantees and
any other documents required by the Letter of Transmittal and Consent, and
either (i) send to the Depositary, or arrange for the Depositary to receive,
at one of such addresses, certificates for the Shares to be tendered or (ii)
effect delivery of such Shares pursuant to the procedures for book-entry
transfer described herein (in which case, a confirmation of such delivery
must also be received by the Depositary); or
(b) comply with the guaranteed delivery procedure described under
"Guaranteed Delivery Procedure" below.
A Preferred Shareholder who is the beneficial owner of Shares which are held
by a broker, dealer, commercial bank, trust company or nominee must contact such
broker, dealer, commercial bank, trust company or nominee to either (i) arrange
for the record transfer of Shares to such Preferred Shareholder prior to
tendering or (ii) direct such Shares be properly tendered (including granting a
consent in respect thereof) on behalf of such Preferred Shareholder.
In tendering, please use the applicable Letter of Transmittal and Consent:
<TABLE>
<CAPTION>
SERIES COLOR
- -------------------------- ---------
<S> <C> <C>
3.75% Series
4 1/2% Series
4.40% Series
4.15% (1954) Series
4.15% Series
</TABLE>
The same Letter of Transmittal and Consent may not be used to tender Shares
and to grant consent with respect to Shares which are not being tendered. A
Preferred Shareholder tendering a portion of his or her Shares and granting a
consent with respect to other Shares without tendering such Shares must submit
two separate Letters of Transmittal and Consent, one with respect to the
tendered Shares and one with respect to the Shares for which a consent is
granted but which are not tendered.
SINCE A CONSENT IS NECESSARY IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO
THE OFFER AND ONLY PREFERRED SHAREHOLDERS OF RECORD AS OF THE RECORD DATE ARE
ENTITLED TO GRANT CONSENTS, PREFERRED SHAREHOLDERS WHO BECOME HOLDERS OF RECORD
OF SHARES AFTER THE RECORD DATE AND WHO WISH TO TENDER SUCH SHARES MUST OBTAIN
AND SUBMIT WITH THEIR TENDER AN
7
<PAGE>
IRREVOCABLE PROXY FROM THE HOLDER OF RECORD OF SUCH SHARES AS OF THE RECORD DATE
IN ORDER TO GRANT THEIR CONSENT TO THE PROPOSAL.
The NYSE, the National Association of Securities Dealers, Inc. (the "NASD")
and DTC have issued notices, informing their members and participants that the
Shares will trade "with proxy" and that settlement of all trades occurring after
the Record Date should include an irrevocable proxy from the holder of record of
such Shares as of the Record Date.
A tender of Shares made pursuant to any method of delivery set forth herein
or in the applicable Letter of Transmittal and Consent in accordance with the
terms hereof and such Letter of Transmittal and Consent will constitute a
binding agreement between the tendering holder and the Company upon the terms
and subject to the conditions of the Offer.
The Depositary will establish an account with respect to the Shares at DTC
(the "Book-Entry Transfer Facility") for purposes of the Offer within two
business days after the date hereof, and any financial institution that is a
participant in the system of the Book-Entry Transfer Facility may make delivery
of Shares by causing the transfer of such Shares into the Depositary's account
in accordance with the procedures of DTC's ATOP system. ALL TENDERS OF SHARES
VIA DTC'S ATOP SYSTEM MUST BE ACCOMPANIED BY A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND CONSENT (TOGETHER WITH ANY OTHER REQUIRED
DOCUMENTS) THAT MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
Delivery of such Letter of Transmittal and Consent and any other required
documents other than to the Depositary will not constitute a valid tender.
If Shares are registered in the name of a person other than the signatory on
the applicable Letter of Transmittal and Consent, or if not all Shares
represented by a certificate are tendered in the Offer and the unpurchased
Shares are to be issued to a person other than the registered holder(s), the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holder(s)
appear on the Shares with the signature(s) on the Shares or stock powers
guaranteed as described below. See Instructions 4, 6 and 7 to the Letter of
Transmittal and Consent.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE PREFERRED SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BECAUSE IT
IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES WHETHER A
TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.
All questions as to the form of documents and the validity, eligibility
(including the time of receipt) and acceptance for payment of any tender of
Shares will be determined by the Company in its sole discretion, and its
determination will be final and binding. The Company reserves the absolute right
to reject any and all tenders of Shares that (i) it determines are not in proper
form or (ii) the acceptance for payment of or payment for which may, in the
opinion of the Company, be unlawful. The Company also reserves the absolute
right to waive any defect or irregularity in any tender of Shares. None of the
Company, the Dealer Manager, the Depositary, the Information Agent nor any other
person will be under any duty to give notice of any defect or irregularity in
tenders, nor shall any of them incur any liability for failure to give any such
notice.
FOR FURTHER INFORMATION IN TENDERING SHARES, CALL THE INFORMATION AGENT OR
THE DEALER MANAGER OR CONSULT YOUR BROKER FOR ASSISTANCE.
SIGNATURE GUARANTEES. In general, all signatures on a Letter of Transmittal
and Consent must be guaranteed by a firm that is a member of a registered
national securities exchange or the NASD, or by a commercial bank or trust
company having an office or correspondent in the United States that is a
participant in an approved Signature Guarantee Medallion Program (each of the
foregoing being referred
8
<PAGE>
to as an "Eligible Institution"). However, signatures on a Letter of Transmittal
and Consent need not be guaranteed if (a) the Letter of Transmittal and Consent
is signed by the registered owner of the Shares tendered therewith and such
owner has not completed the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions" on the Letter of Transmittal and
Consent, (b) such Shares are tendered for the account of an Eligible Institution
or (c) the Letter of Transmittal and Consent is being used solely for the
purpose of voting with respect to Shares which are not being tendered pursuant
to the Offer. See Instructions 1 and 5 of the Letter of Transmittal and Consent.
GUARANTEED DELIVERY PROCEDURE. If a Preferred Shareholder desires to tender
Shares pursuant to the Offer and such Preferred Shareholder's certificates are
not immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered if all of the following guaranteed delivery procedures are complied
with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery and Consent, substantially in the form provided by the Company
herewith, is received (with any required signatures or signature guarantees)
by the Depositary on or prior to the Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a book-entry confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
and Consent and any other documents required by the Letter of Transmittal
and Consent, are received by the Depositary no later than 5:00 p.m., New
York City time, within three business days after the date of delivery of
such Notice of Guaranteed Delivery and Consent.
THE NOTICE OF GUARANTEED DELIVERY AND CONSENT MAY BE DELIVERED BY HAND OR
MAILED TO THE DEPOSITARY AND MUST INCLUDE AN ENDORSEMENT BY AN ELIGIBLE
INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF GUARANTEED DELIVERY AND
CONSENT.
In all cases, Shares shall not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal and Consent is received by the
Depositary within the applicable time limits, and the consent of the record
holder to the Proposal has been granted with respect to such Shares.
AVOIDING BACKUP WITHHOLDING TAX WHEN TENDERING. To avoid federal income tax
backup withholding equal to 31% of the gross payment made pursuant to the Offer
or, alternatively, the Special Cash Payment, each tendering Preferred
Shareholder and each non-tendering Preferred Shareholder who grants his or her
consent to the Proposal must notify the Depositary of such Preferred
Shareholder's correct taxpayer identification number and provide certain other
information by properly completing and executing the Substitute Form W-9
included in the Letter of Transmittal and Consent (or, in the case of a foreign
preferred shareholder, must complete and execute Form W-8 obtainable from the
Depositary). See "Certain Federal Income Tax Considerations--Backup
Withholding."
EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after , 1999, unless previously
accepted for payment as provided herein.
The consent accompanying any tendered Shares that are withdrawn will not be
considered revoked unless the Preferred Shareholder specifically revokes such
consent as described below under "Proposal and Consent Solicitation--Revocation
of Consents."
9
<PAGE>
To be effective, a written notice of withdrawal must be timely received by
the Depositary (at one of its
addresses set forth on the back cover hereof) and must specify the name of the
person who tendered the Shares to be withdrawn and the number of Shares to be
withdrawn. If the Shares to be withdrawn have been delivered to the Depositary,
a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution (except in the case of Shares tendered by an Eligible Institution)
must be submitted prior to the release of such Shares. In addition, such notice
must specify, in the case of Shares tendered by delivery of certificates, the
name of the registered owner (if different from that of the tendering Preferred
Shareholder) and the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn or, in the case of Shares tendered by
book-entry transfer, the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares and the name of the
registered holder (if different from the name of such account). Withdrawals may
not be rescinded, and Shares withdrawn will thereafter be deemed not validly
tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered
by again following the procedures described in "Terms of the Offer--Procedure
for Tendering Shares" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Company, in its sole discretion,
and its determination will be final and binding. None of the Company, the Dealer
Manager, the Depositary, the Information Agent nor any other person will be
under any duty to give notification of any defect or irregularity in any notice
of withdrawal or will incur any liability for failure to give any such
notification.
ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer, and as promptly
as practicable after the Expiration Date, the Company will accept for payment
(and thereby purchase) and pay for Shares validly tendered and not withdrawn as
permitted in "Terms of the Offer--Withdrawal Rights." Thereafter, payment for
all Shares accepted pursuant to the Offer will be made by the Depositary by
check as promptly as practicable after the Expiration Date. Notwithstanding any
other provision hereof, in all cases, payment for Shares accepted for payment
pursuant to the Offer will be made promptly but only after timely receipt by the
Depositary of certificates for, or a confirmation of a book-entry transfer with
respect to, such Shares, a properly completed and duly executed Letter of
Transmittal and Consent with any required signature guarantees and any other
required documents. Accordingly, tendering Preferred Shareholders may be paid at
different times depending upon when certificates for Shares or confirmations of
book-entry transfers are actually received by the Depositary.
The Company will be deemed to have accepted for payment (and thereby have
purchased) Shares that are validly tendered and not withdrawn as, if and when it
gives oral and written notice to the Depositary of its acceptance for payment of
such Shares. The Company will pay for Shares that it has purchased pursuant to
the Offer by depositing the purchase price therefor with the Depositary, which
will act as agent for tendering Preferred Shareholders for the purpose of
receiving payment from the Company and transmitting payment to such Preferred
Shareholders. UNDER NO CIRCUMSTANCES WILL INTEREST ACCRUE OR BE PAID ON AMOUNTS
TO BE PAID BY THE COMPANY TO TENDERING PREFERRED SHAREHOLDERS, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR DELAY IN MAKING SUCH PAYMENT. Certificates for all
Shares not validly tendered or accepted for payment will be returned or, in the
case of Shares tendered by book-entry transfer, such Shares will be credited to
an account maintained with the Book-Entry Transfer Facility, as promptly as
practicable, without expense to the tendering Preferred Shareholder.
If the conditions to the Offer are not satisfied (or waived by the Company),
the Company will not be obligated to purchase Shares pursuant to the Offer. See
"Terms of the Offer--Conditions of the Offer."
The Company will pay or cause to be paid any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be
10
<PAGE>
made to, or if not all Shares represented by a certificate are tendered in the
Offer and the unpurchased Shares are to be registered in the name of, any person
other than the registered owner of the Shares, or if tendered Shares are
registered in the name of any person other than the person signing the Letter of
Transmittal and Consent, the amount of any stock transfer taxes (whether imposed
on the registered owner, such other person or otherwise) payable on account of
the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. Each Preferred Shareholder will be responsible for paying any income
or gross receipts taxes imposed by any jurisdiction by reason of the sale of the
Shares and/or the Special Cash Payment. See Instruction 6 to the Letter of
Transmittal and Consent; see also "Proposal and Consent Solicitation-- Special
Cash Payments" and "Certain Federal Income Tax Considerations."
CONDITIONS OF THE OFFER
THE COMPANY WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES
TENDERED IF THE PROPOSAL IS NOT APPROVED BY HOLDERS OF AT LEAST A MAJORITY OF
THE VOTES OF SHARES OF THE OUTSTANDING SERIAL PREFERRED STOCK ENTITLED TO BE
CAST, CONSIDERED TOGETHER AS ONE CLASS. SEE "PROPOSAL AND CONSENT
SOLICITATION--RECORD DATE; VOTING SECURITIES; REQUIRED VOTE."
In addition, notwithstanding any other provision of the Offer, the Company
will not be required to accept for payment or pay for any tendered Shares of any
Series of Preferred, and may terminate or amend the Offer with respect to such
Series of Preferred (by oral or written notice to the Depositary and timely
public announcement) or may postpone (subject to the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") for prompt
payment for or return of Shares) the acceptance for payment of, or payment for,
Shares of such Series of Preferred that are tendered, if at any time on or after
, 1999, and on or before the Expiration Date, any of the
following shall have occurred:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, or before any court, authority, agency or tribunal that (i)
challenges the acquisition of Shares pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the reasonable
judgment of the Company, would or might materially and adversely affect the
business, condition (financial or otherwise), income, operations or
prospects of the Company, or of EEC and its subsidiaries taken as a whole,
or otherwise materially impair in any way the contemplated future conduct of
the business of EEC or any of its subsidiaries or materially impair the
Offer's contemplated benefits to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or EEC or any of
its subsidiaries, by any legislative body, court, authority, agency or
tribunal that, in the Company's reasonable judgment, would or might directly
or indirectly (i) make the acceptance for payment of, or payment for, some
or all of the Shares illegal or otherwise restrict or prohibit consummation
of the Offer; (ii) delay or restrict the ability of the Company, or render
the Company unable to accept for payment or pay for some or all of the
Shares; (iii) materially impair the contemplated benefits of the Offer to
the Company (including materially increasing the effective interest cost of
certain types of unsecured debt); or (iv) materially affect the business,
condition (financial or otherwise), income, operations or prospects of the
Company, or of EEC and its subsidiaries taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the business
of EEC or any of its subsidiaries;
(c) there shall have occurred (i) any significant decrease in the market
price of the Shares of such Series of Preferred; (ii) any change in the
general political, market, economic or financial conditions in the United
States or abroad that, in the reasonable judgment of the Company, would or
might have
11
<PAGE>
a material adverse effect on the Company's business, operations, prospects
or ability to obtain financing generally or the trading in the Shares or
other equity securities of the Company or EEC; (iii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or any limitation on, or any event that, in the Company's
reasonable judgment, would or might affect the extension of credit by
lending institutions in the United States; (iv) the commencement of war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States; (v) any general suspension of
trading in, or limitation on prices for securities on any national
securities exchange or in the OTC; (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, in the Company's
reasonable judgment, a material acceleration or worsening thereof; (vii) any
decline in either the Dow Jones Industrial Average or the Standard & Poor's
Composite 500 Stock Index by an amount in excess of 15% measured from the
close of business on , 1999; or (viii) a decline in the
ratings accorded any of the Company's securities by Standard & Poor's Rating
Services ("S&P"), Moody's Investors Service, Inc. ("Moody's") or Duff &
Phelps, Inc. ("D&P") during the period beginning on the close of business on
, 1999, or an announcement by S&P, Moody's or D&P that it
has placed any such rating under surveillance or review with negative
implications;
(d) any tender or exchange offer with respect to some or all of the
Outstanding Serial Preferred Stock of the Company (other than the Offer) or
other equity securities of the Company or EEC, or a merger, acquisition or
other business combination proposal for the Company or EEC, shall have been
proposed, announced or made by any person or entity; or
(e) there shall have occurred any event or events that have resulted, or
in the Company's reasonable judgment may result, in an actual or threatened
change in the business, condition (financial or otherwise), income,
operations, stock ownership or prospects of the Company, or of EEC and its
subsidiaries taken as a whole; and, in the sole judgment of the Company,
such event or events make it undesirable or inadvisable to proceed with the
Offer or with such acceptance for payment or payment.
The foregoing conditions (including the condition that the Proposal be
approved) are for the sole benefit of the Company and may be asserted by the
Company regardless of the circumstances (including any action or inaction by the
Company) giving rise to the failure of any such condition to be satisfied, and
any such condition may be waived by the Company, in whole or in part, at any
time and from time to time in its sole discretion. A decision by the Company to
terminate or otherwise amend the Offer, following the occurrence of any of the
foregoing or the failure of any condition to be satisfied, with respect to one
Series of Preferred will not create an obligation on behalf of the Company to
terminate or otherwise amend in a similar manner the Offer with respect to any
other Series of Preferred. The failure by the Company at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by the Company concerning the
events described above will be final and binding on all parties.
TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion, to, among
other things, terminate the Offer and not accept for payment or pay for any
Shares tendered (subject to Rule 13e-4(f)(5) under the Exchange Act, which
requires the Company either to pay the consideration offered or to return the
Shares tendered promptly after the termination or withdrawal of the Offer), upon
the occurrence of any of the conditions specified in "Terms of the
Offer--Conditions of the Offer" (by giving oral or written notice of such
termination to the Depositary, and making a public announcement thereof).
Subject to compliance with applicable law, the Company further reserves the
right, in its sole discretion, to amend the Offer in any respect. Amendments to
the Offer may be made at any time or from
12
<PAGE>
time to time effected by public announcement thereof, such announcement, in the
case of an extension, to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Any
public announcement made pursuant to the Offer will be disseminated promptly to
Preferred Shareholders affected thereby in a manner reasonably calculated to
inform such Preferred Shareholders of such change. Without limiting the manner
in which the Company may choose to make a public announcement, except as
required by applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will disclose promptly such change and extend the Offer to the extent
required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act. Those
rules require that the minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer (other than a change in price, a change in percentage of securities
sought or a change in the dealer's solicitation fee) will depend on the facts
and circumstances, including the relative materiality of such terms of
information. The Securities and Exchange Commission (the "Commission") has
stated that, in its view, an offer should remain open for a minimum of five
business days from the date that a notice of such a material change is first
published, sent or given. Pursuant to Rule 13e-4(f)(1), if the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that the Company
publishes, sends or gives to Preferred Shareholders a notice that it will (i)
increase or decrease the price it will pay for Shares, (ii) decrease the
percentage of Shares it seeks, or (iii) increase or decrease the soliciting
dealers' fees, the Offer will be extended until the expiration of such ten
business day period.
THE OFFER FOR ANY ONE SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR
ANY OTHER SERIES OF PREFERRED. IF THE COMPANY EXTENDS OR AMENDS ANY OFFER WITH
RESPECT TO ANY ONE SERIES OF PREFERRED FOR ANY REASON, THE COMPANY WILL HAVE NO
OBLIGATION TO EXTEND OR AMEND THE OFFER FOR ANY OTHER SERIES OF PREFERRED.
13
<PAGE>
PROPOSAL AND CONSENT SOLICITATION
INTRODUCTION
In addition to the Offer, this document relates to the solicitation of
consents by the Board of Directors of the Company with respect to the Proposal.
A separate Consent Statement is being mailed to the holders of the Company's
6.30% Series, since the 6.30% Series is not included in the Offer.
Under the Company's Charter, the Company cannot, without the consent,
granted in writing without a meeting, or by a vote at a meeting, of the holders
of at least a majority of the votes entitled to be cast by the holders of the
aggregate number of shares of the Outstanding Serial Preferred Stock, considered
together as one class, issue or assume any unsecured notes, debentures or other
securities representing unsecured indebtedness, other than for the refunding of
outstanding debt securities theretofore issued or assumed by the Company or for
the redemption or retirement of all the shares of the Outstanding Serial
Preferred Stock, if, immediately after such issue or assumption, the total
principal amount of all unsecured notes, debentures or other securities
representing unsecured indebtedness then outstanding would exceed: (a) 10% of
the sum of (i) the total principal amount of all bonds or other securities
representing secured indebtedness issued or assumed by the Company and then to
be outstanding and (ii) the capital and surplus of the Company as then stated on
its books; plus (b) $10,000,000 (which additional amount was approved by the
holders of the Company's serial preferred stock in 1957); in addition, unsecured
indebtedness that the Company issues in connection with financing pollution
control facilities is specifically excluded from the calculation of unsecured
indebtedness pursuant to the consent of the holders of the Company's serial
preferred stock given in 1975 (collectively the "Present Limitation"). At
present, this would entitle the Company to have outstanding approximately $200
million in unsecured indebtedness, of which approximately $ million is
presently outstanding, in addition to unsecured indebtedness issued or to be
issued in connection with financing pollution control facilities. The Company is
seeking the consent of the holders of the Outstanding Serial Preferred Stock to
the issuance by the Company of up to $ of unsecured indebtedness in excess of
the Present Limitation. The Company believes that the ability to issue
additional unsecured indebtedness will provide the Company the flexibility to
obtain financing on terms more advantageous to the Company than would otherwise
be the case.
Preferred Shareholders who wish to tender their Shares pursuant to the Offer
must grant their consent to the Proposal. However, Preferred Shareholders need
not tender their Shares in order to consent to the Proposal. Only holders of
record of the Company's Outstanding Serial Preferred Stock as of the Record Date
or persons obtaining an irrevocable proxy from such holders will be entitled to
grant consents.
SPECIAL CASH PAYMENTS
Subject to the terms and conditions set forth in this document, if, but only
if, a Preferred Shareholder consents to the Proposal with respect to Shares but
does not tender those Shares and the Proposal is approved, the Company will make
the Special Cash Payment to such Preferred Shareholder in an amount equal to
$ for each such Share.
PREFERRED SHAREHOLDERS WHO TENDER THEIR SHARES WILL NOT BE ENTITLED TO THE
SPECIAL CASH PAYMENT. RATHER, SUCH PREFERRED SHAREHOLDERS WILL BE ENTITLED TO
ONLY THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS DOCUMENT.
IF A HOLDER OF THE COMPANY'S OUTSTANDING SERIAL PREFERRED STOCK DOES NOT
GRANT HIS OR HER CONSENT TO THE PROPOSAL OR ABSTAINS, SUCH HOLDER SHALL NOT BE
ENTITLED TO THE SPECIAL CASH PAYMENT (REGARDLESS OF WHETHER THE PROPOSAL IS
APPROVED).
14
<PAGE>
RECORD DATE; VOTING SECURITIES; REQUIRED VOTE
The Record Date for determining those holders of the Company's Outstanding
Serial Preferred Stock entitled to grant consents to the Proposal will be
, 1999. The Company has six series of Outstanding Serial Preferred
Stock and the record holders of all shares of the Company's Outstanding Serial
Preferred Stock will be considered together as one class with respect to the
Proposal. Each share of Outstanding Serial Preferred Stock is entitled to one
vote per share with respect to the Proposal. The shares of Outstanding Serial
Preferred Stock on , 1999, are as follows:
<TABLE>
<CAPTION>
SHARES
SERIES OUTSTANDING
- ----------------------------------------------------------------------------------------------------- -----------
<S> <C>
3.75% Series......................................................................................... 150,000
4 1/2% Series........................................................................................ 40,000
4.40% Series......................................................................................... 55,200
4.15% (1954) Series.................................................................................. 35,200
4.15% Series......................................................................................... 14,000
6.30% Series ................................................................................... 250,000
-----------
Total Votes Entitled to be Cast...................................................................... 544,400
</TABLE>
The consent of the holders of record as of the Record Date of at least a
majority of the votes of shares of the Outstanding Serial Preferred Stock
entitled to be cast, considered together as one class, is required to approve
the Proposal. Thus, in order for the Proposal to be approved, the Company must
receive the consents of the holders representing at least 272,201 votes of
shares of the Outstanding Series Preferred Stock.
PLEASE NOTE THAT THE FOLLOWING ACTIONS WILL HAVE THE SAME EFFECT AS
WITHHOLDING CONSENT TO THE PROPOSAL: (A) FAILING TO PROPERLY EXECUTE, DATE AND
RETURN A LETTER OF TRANSMITTAL AND CONSENT OR (B) EXECUTING, DATING AND
RETURNING A CONSENT FORM MARKED "WITHHOLD CONSENT" OR "ABSTAIN" AS TO THE
PROPOSAL. IF RETURNED CONSENT FORMS ARE EXECUTED AND DATED BUT NOT MARKED WITH
RESPECT TO THE PROPOSAL, THE SHAREHOLDER WILL BE DEEMED TO HAVE CONSENTED TO THE
PROPOSAL.
The approval of the holders of the Company's common stock is not required
for the Proposal to be approved, and no consent is being solicited from such
holders.
CONSENTS
The Company is a New York corporation and is, therefore, subject to the New
York Business Corporation Law (the "BCL"). The BCL permits action without a
meeting by less than unanimous written consent of shareholders where any
provision in a certificate of incorporation so provides. The Company's Charter
provides that so long as any shares of the Company's serial preferred stock are
outstanding, a majority of the votes entitled to be cast by the holders of the
aggregate number of shares of serial preferred stock then outstanding may
consent in writing without a meeting to the Company's issuance of unsecured
indebtedness in excess of the Present Limitation.
The Proposal will become effective when duly completed, valid and unrevoked
consents to the Proposal, signed by the holders of record as of the Record Date
of at least a majority of the votes of shares of the Company's Outstanding
Serial Preferred Stock entitled to be cast, are delivered to the Company.
Consents accompanying tendered Shares will not be deemed delivered to the
Company unless and until the tendered Shares are accepted for payment. Preferred
Shareholders are requested to return their consents by the return date of
, 1999.
15
<PAGE>
THE ENCLOSED CONSENT FORM, WHICH IS CONTAINED WITHIN THE APPLICABLE LETTER
OF TRANSMITTAL AND CONSENT (AND THE NOTICE OF GUARANTEED DELIVERY AND CONSENT),
IS BEING SOLICITED BY THE COMPANY'S BOARD, WHICH RECOMMENDS THAT YOU GRANT YOUR
CONSENT TO THE PROPOSAL.
PROCEDURAL INSTRUCTIONS
Only holders of record of the Company's Outstanding Serial Preferred Stock
as of the Record Date or persons obtaining an irrevocable proxy from such
holders will be entitled to grant their consents.
If a Preferred Shareholder is a record holder of shares of Outstanding
Serial Preferred Stock as of the close of business on the Record Date, such
Preferred Shareholder may consent to, withhold consent to or abstain with
respect to the Proposal by marking the "CONSENT," "WITHHOLD CONSENT" or
"ABSTAIN" box, as applicable, within the applicable Letter of Transmittal and
Consent (and the Notice of Guaranteed Delivery and Consent) and signing, dating
and returning it promptly in the enclosed postage-paid envelope. PREFERRED
SHAREHOLDERS GRANTING THEIR CONSENT TO THE PROPOSAL MUST USE THE CONSENT FORM
THAT IS A PART OF THE APPLICABLE LETTER OF TRANSMITTAL AND CONSENT WHETHER OR
NOT SHARES ARE BEING TENDERED PURSUANT TO THE OFFER.
A Preferred Shareholder may grant a consent to the Proposal but not tender
Shares pursuant to the Offer. In such case, the Preferred Shareholder should
complete the consent form in the applicable Letter of Transmittal and Consent
but should not send certificates or effect a book-entry transfer of his or her
Shares. The same Letter of Transmittal and Consent may not be used to tender
Shares and to grant consent with respect to Shares which are not being tendered.
A Preferred Shareholder tendering a portion of his or her Shares and granting a
consent with respect to other Shares without tendering such Shares must submit
two separate Letters of Transmittal and Consent, one with respect to the
tendered Shares and one with respect to the Shares for which a consent is
granted but which are not tendered.
If a Preferred Shareholder withholds consent or abstains, any purported
tender by such Preferred Shareholder will not be valid, and such Preferred
Shareholder will not be entitled to receive either the purchase price per Share
listed on the front cover of this document or the Special Cash Payment in
respect of his or her Shares. Any beneficial owner of Shares who is not the
registered holder of such Shares as of the Record Date (as would be the case for
any beneficial owner whose Shares are registered in the name of such owner's
broker, dealer, commercial bank, trust company or other nominees) must arrange
with the record holder to execute and deliver a consent form on such beneficial
owner's behalf.
SINCE A CONSENT IS NECESSARY IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO
THE OFFER AND ONLY PREFERRED SHAREHOLDERS OF RECORD AS OF THE RECORD DATE ARE
ENTITLED TO GRANT CONSENTS, PREFERRED SHAREHOLDERS WHO BECOME HOLDERS OF RECORD
OF SHARES AFTER THE RECORD DATE AND WHO WISH TO TENDER SUCH SHARES MUST OBTAIN
AND SUBMIT WITH THEIR TENDER AN IRREVOCABLE PROXY FROM THE HOLDER OF RECORD OF
SUCH SHARES AS OF THE RECORD DATE IN ORDER TO GRANT THEIR CONSENT TO THE
PROPOSAL. AFTER THE RECORD DATE, THE SHARES OF EACH SERIES OF PREFERRED WILL
TRADE "WITH PROXY." SETTLEMENT OF ALL TRADES AFTER THE RECORD DATE SHOULD
INCLUDE AN IRREVOCABLE PROXY FROM THE HOLDER OF RECORD OF SUCH SHARES AS OF THE
RECORD DATE.
All questions as to the form and the validity (including the time of
receipt) of consents and the eligibility for the Special Cash Payment will be
determined by the Company in its sole discretion, and its determination will be
final and binding. The Company reserves the absolute right to reject any and all
consents that (i) it determines are not in proper form or (ii) the acceptance of
or the payment of the Special Cash Payment with respect to which may, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any defect or irregularity in any consent. None of
16
<PAGE>
the Company, the Dealer Manager, the Depositary, the Information Agent nor any
other person will be under any duty to give notice of any defect or irregularity
in a consent, nor shall any of them incur any liability for failure to give any
such notice.
REVOCATION OF CONSENTS
Executed consents may be revoked at any time prior to the time that the
Proposal becomes effective, provided that a written, dated revocation which
clearly identifies the consent being revoked is executed and delivered to the
Depositary at the address set forth on the back cover of this document. A
revocation may be in any written form validly signed by the record holder as of
the Record Date as long as it clearly states that the consent previously given
is no longer effective.
Withdrawal of Shares tendered pursuant to the Offer will not itself revoke a
properly executed consent. Preferred Shareholders who wish to tender Shares
pursuant to the Offer must grant their consent to the Proposal with respect to
all such Shares. If a consent is withdrawn, the related Shares will not be
deemed to have been validly tendered.
All questions as to the form and validity (including time of receipt) of any
notice of revocation will be determined by the Company, in its sole discretion,
and its determination will be final and binding. None of the Company, the Dealer
Manager, the Depositary, the Information Agent nor any other person will be
under any duty to give notification of any defect or irregularity in any notice
of revocation or will incur any liability for failure to give any such
notification.
APPRAISAL RIGHTS
No appraisal rights under the BCL are available in connection with the
Proposal.
COST OF SOLICITATION
The Company will bear the cost of the solicitation of consents by the Board.
Consents will be solicited by mail or by telephone. In addition, officers and
employees of the Company and its affiliates may also solicit consents personally
or by telephone; such persons will receive no additional compensation for these
services. The Company has engaged Georgeson & Company, Inc. to act as
Information Agent in connection with the Offer and the solicitation of consents
for a fee of $15,000, and reasonable out-of-pocket expenses. The Information
Agent has not been retained to make, and will not make, solicitations or
recommendations, other than conveying information related to the recommendations
of the Board, in connection with the Proposal.
In connection with Salomon Smith Barney's engagement as Dealer Manager in
connection with the Offer, employees of Salomon Smith Barney will communicate in
person, by telephone or otherwise with Preferred Shareholders for the purpose of
assisting in the solicitation of consents in connection with the Proposal. If
the Proposal is approved, Salomon Smith Barney will receive a fee of $.50 per
Share for Shares not tendered but in respect of which a valid consent is
received. In addition, in connection with the solicitation of consents with
respect to the 6.30% Series, if the Proposal is approved, Salomon Smith Barney
will receive a fee of $.50 per share of the 6.30% Series in respect of which a
valid consent is received. In connection with the Offer, Salomon Smith Barney
may receive certain additional fees as described below under "Fees and
Expenses."
If the Proposal is approved, Soliciting Dealers who solicit consents will
receive certain fees as described below under "Fees and Expenses."
The Company has requested that brokerage houses and other custodians,
nominees and fiduciaries forward solicitation materials to the beneficial owners
of shares of the Company's Outstanding Serial Preferred Stock held of record by
such persons, and the Company will reimburse such brokers and other fiduciaries
for their reasonable out-of-pocket expenses incurred in connection therewith.
17
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company's Outstanding Serial Preferred Stock are the only securities of
the Company whose consent is required with respect to the Proposal. There were
approximately holders of record of shares of the Company's
Outstanding Serial Preferred Stock as of , 1999.
Generally, under Section 13(d) of the Exchange Act, a beneficial owner of a
security is any person who directly or indirectly has or shares voting or
investment power over such security. No person or group is known by management
of the Company to be the beneficial owner of more than 5% of the shares of the
Company's Outstanding Serial Preferred Stock as of , 1999 and none
of the Company's directors or executive officers own any shares of the Company's
Outstanding Serial Preferred Stock.
REASONS FOR THE PROPOSAL; CERTAIN EFFECTS OF THE PROPOSAL
The Company believes that the approval of the Proposal would provide the
Company with greater flexibility to obtain financing on terms more advantageous
to the Company than would otherwise be the case. It would enable the Company to
issue unsecured debt to meet future financing requirements and for other
corporate purposes. Given that the utility industry is extremely capital
intensive, controlling and minimizing financing costs are essential ingredients
to operating efficiently in the new competitive environment. As competition has
intensified in the utility industry, financial flexibility and financial cost
structure has become increasingly important for the success of the Company.
The Company believes that approval of the Proposal will play an important
role in increasing the financial flexibility and improving the financial cost
structure of the Company. Historically, the Company's long-term debt financing
has been accomplished through the issuance of first mortgage bonds. The issuance
of first mortgage bonds is generally more costly to the Company than unsecured
indebtedness because of the added expense of the New York mortgage recording
tax, which is generally approximately 0.8% of the principal amount of bonds
being issued. The Company anticipates changing the mix of debt securities toward
more issuances on an unsecured basis.
At present, the Company cannot have outstanding more than approximately $200
million of unsecured indebtedness (in addition to unsecured indebtedness issued
or to be issued to finance pollution control facilities) without the required
consent of the Company's Outstanding Serial Preferred Stock but can incur
secured indebtedness without such consent. Accordingly, to the extent the
Proposal allows the Company to incur a greater amount of total indebtedness, and
such indebtedness increases the credit risks of the Company, the market price
and credit rating of the Outstanding Serial Preferred Stock could decline.
PRICE RANGE OF SHARES; DIVIDENDS
The 3.75% Series is traded on the NYSE, under the symbol " ," while the
4 1/2% Series, 4.40% Series, 4.15% (1954) Series, and 4.15% Series are traded in
the OTC under the symbols " ," " ," " ," and
" ," respectively. On , 1999 the last reported sale price on
the NYSE for the 3.75% Series was $ , and the last reported bid
quotation as reported by the National Quotation Bureau, LLC was $ for
the 4 1/2% Series, $ for the 4.40% Series, $ for the 4.15%
(1954) Series and $ for the 4.15% Series. However, Preferred Shareholders
should be aware that the Shares of each Series of Preferred trade only
sporadically and on a limited basis and, therefore, the last reported sales
price may not necessarily reflect the then-current market value of the Shares.
PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF
AVAILABLE, FOR THE SHARES.
18
<PAGE>
The following table sets forth the cash dividends paid for the fiscal
quarters indicated for each Series of Preferred, and the high and low sales
price of the 3.75% Series on the NYSE and the range of high and low bid
quotations in the OTC for the 4 1/2% Series, 4.40% Series, 4.15% (1954) Series
and 4.15% Series.
DIVIDENDS AND PRICE RANGES OF SERIES OF PREFERRED
BY QUARTERS (1997, 1998 AND 1999 (THROUGH , 1999))
<TABLE>
<CAPTION>
1997--QUARTERS 1998--QUARTERS 1999
------------------------------- ------------------------------------------ ---------
2ND 3RD 4TH 1ST 2ND 3RD 4TH 1ST
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3.75% SERIES
Dividends Per Share........... $ .9375 $ .9375 $ .9375 $ .9375 $ .9375 $ .9375 $ .9375 $ .9375
Sales Price--$ Per Share......
--High......................
--Low.......................
4 1/2% SERIES
Dividends Per Share........... $ 1.125 $ 1.125 $ 1.125 $ 1.125 $ 1.125 $ 1.125 $ 1.125 $ 1.125
Bid Quotations--$ Per Share...
--High......................
--Low.......................
4.40% SERIES
Dividends Per Share........... $ 1.110 $ 1.110 $ 1.110 $ 1.110 $ 1.110 $ 1.110 $ 1.110 $ 1.110
Bid Quotations--$ Per Share...
--High......................
--Low.......................
4.15% (1954) SERIES
Dividends Per Share........... $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375
Bid Quotations--$ Per Share...
--High......................
--Low.......................
4.15% SERIES
Dividends Per Share........... $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375 $ 1.0375
Bid Quotations--$ Per Share...
--High......................
--Low.......................
</TABLE>
- ------------------------
Dash indicates no reported sales during the quarter.
The holders of the Company's Outstanding Serial Preferred Stock are entitled
to receive, if, when and as declared by the Board, cash dividends at the annual
rate specified for such preferred stock, and no more, cumulative and payable
quarterly on each January 1, April 1, July 1 and October 1. To date, the Company
has timely made all quarterly dividend payments on the Company's Outstanding
Serial Preferred Stock.
The April 1999 dividend has been declared on the Company's Outstanding
Serial Preferred Stock, payable on April 1, 1999 to holders of record on March
10, 1999. A tender and purchase of Shares pursuant to the Offer will not deprive
a Preferred Shareholder of his or her right to receive the April 1999 dividend
on Shares held of record on March 10, 1999, regardless of whether such
Shareholder tenders his or her Shares in the Offer prior to that date. Tendering
Preferred Shareholders will not be entitled to any dividends in respect of any
later dividend periods (or any portion thereof).
19
<PAGE>
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
The Company believes that the purchase of the Shares and approval of the
Proposal at this time will provide the Company the flexibility to obtain
financing on terms more advantageous to the Company than would otherwise be the
case. In addition, the Offer gives Preferred Shareholders the opportunity to
sell their Shares at a price which the Company believes to be a premium to
generally prevailing market prices
on the date of the announcement of the Offer without the usual transaction costs
associated with a market sale. The Company expects to cancel any Shares
purchased pursuant to the Offer and restore such Shares to the status of
authorized but unissued shares.
TRADING AND LIQUIDITY. Any purchase of Shares of any Series of Preferred by
the Company in the Offer will reduce the number of Shares of that Series of
Preferred that might otherwise trade publicly or become available for purchase
and/or sale and will likely reduce the number of owners of Shares of that Series
of Preferred, which could adversely affect the liquidity and market value and
increase the price volatility of the Shares of that Series of Preferred not
purchased in the Offer.
Equity securities which are less liquid because of a smaller outstanding
market value available for trading (the "float") may command a lower price than
would comparable equity securities with a greater float. Therefore, the market
price for Shares of a Series of Preferred that are not tendered and purchased in
the Offer may be affected adversely to the extent that the amount of Shares of
that Series of Preferred purchased pursuant to the Offer reduces the float. The
reduced float of a Series of Preferred may also make the trading price of the
Shares of that Series of Preferred that are not tendered and accepted for
payment more volatile. If the Offer is completed with respect to any Series of
Preferred, there can be no assurance that any trading market will exist for such
Series of Preferred following consummation of the Offer. To the extent a market
continues to exist for the Shares following consummation of the Offer for a
Series of Preferred, Shares of that Series of Preferred may trade at a discount
compared to current trading, depending on the market for shares with similar
features, the performance of the Company and other factors. There is no
assurance that an active market in the Shares will exist and no assurance as to
the prices at which the Shares may trade following the Offer.
The Shares are currently registered under Section 12(g) of the Exchange Act,
except the 3.75% Series, which is registered under Section 12(b) of the Exchange
Act. If the Shares currently registered under Section 12(g) of the Exchange Act
are no longer held by 300 or more owners of record, the Company may apply to the
Commission for termination of such registration. In addition, the Company may
apply to delist and deregister the 3.75% Series. Such actions may substantially
reduce the information required to be furnished by the Company to holders of the
Shares and could make certain provisions of the Exchange Act no longer
applicable to the Company.
As of , 1999, there were registered holders of the 3.75%
Series, registered holders of the 4 1/2% Series, registered holders
of the 4.40% Series, registered holders of the 4.15% (1954) Series, and
registered holders of the 4.15% Series.
FUTURE PURCHASES. After the consummation of the Offer, the Company may
purchase additional Shares on the open market, in privately negotiated
transactions, through one or more tender offers, or otherwise. However, there
can be no assurance the Company will effect any such purchase. Any such purchase
may be on the same terms as, or on terms which are more or less favorable to
holders of Shares than, the terms of the Offer. However, Rule 13e-4(f)(6) under
the Exchange Act prohibits the Company and its affiliates from purchasing any
Shares of a Series of Preferred, other than pursuant to the Offer, until at
least ten business days after the Expiration Date with respect to that Series of
Preferred. Any future purchases of Shares by the Company would depend on many
factors, including the market price of the Shares, the Company's business and
financial position, and legal restrictions on the Company's ability to purchase
Shares, as well as general economic and market conditions.
20
<PAGE>
REDEMPTION OF SHARES; TERMS OF PREFERRED. Preferred Shareholders are not
under any obligation to tender Shares pursuant to the Offer. The Offer does not
constitute a notice of redemption of any Series of Preferred pursuant to the
Company's Charter, nor does the Company intend to effect any such redemption by
making the Offer. Further, the Offer does not constitute a waiver by the Company
of any option it has to redeem Shares.
Shares which are not tendered will continue to be subject to their current
redemption and liquidation provisions. The Series of Preferred are redeemable at
the option of the Company in whole or in part upon not less than thirty days and
not more than ninety days notice at the applicable redemption prices plus
accrued and unpaid dividends up to the date fixed for redemption. The 3.75%
Series is redeemable at a price equal to $104.00 per share, the 4 1/2% Series is
redeemable at a price equal to $103.75 per share, the 4.40% Series is redeemable
at a price equal to $102.00 per share, the 4.15% (1954) Series is redeemable at
a price equal to $102.00 per share and the 4.15% Series is redeemable at a price
equal to $101.00 per share. The holders of the Series of Preferred have no
preemptive or conversion rights.
The amount or amounts per share payable in cash to the holders of a Series
of Preferred on any voluntary or involuntary liquidation, dissolution or
winding-up of the Company will be the amount or amounts (not less than the par
value thereof plus all dividends accumulated and unpaid thereon) fixed for such
Series of Preferred, and no more, before any amount may be paid to, or assets
distributed among, holders of stock ranking junior to such Series of Preferred.
The amount per share payable on a Series of Preferred in the event of any
voluntary liquidation, dissolution or winding-up of the Company shall be the
amount per share at which such Shares could be redeemed (other than through a
sinking fund, if any) as set forth above, and the amount per share payable on
the Series of Preferred in the event of any involuntary liquidation, dissolution
or winding-up shall be the par value thereof, together in each case with an
amount equal to accrued unpaid dividends to the date of such liquidation,
dissolution or winding-up.
FUTURE CORPORATE ACTION. Following the consummation of the Offer, the
Company expects that the business and operations of the Company will be
continued substantially as they are currently being conducted. Except as
disclosed herein and in the documents incorporated by reference, the Company has
no plans or proposals that would relate to or result in (a) the acquisition by
any person or entity of additional securities of the Company or the disposition
of securities of the Company, other than in the ordinary course of business; (b)
an extraordinary corporate transaction, such as a merger, reorganization, or
liquidation, involving the Company; (c) a sale or transfer of a material amount
of assets of the Company; (d) any change in the present Board or management of
the Company; (e) any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company; (f) any other material change in
the Company's corporate structure or business; (g) any change in the Charter or
any actions that may impede the acquisition of control of the Company by any
person; (h) a class of equity securities of the Company being delisted from a
national securities exchange; (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act; or (j) the suspension of the Company's obligation to file
reports pursuant to Section 15(d) of the Exchange Act.
However, in order to adapt to the increasingly competitive environment in
which EEC and the Company operate, they will evaluate and consider a wide array
of potential business strategies. These may include business combinations or
acquisitions involving other utility or non-utility businesses or properties,
and internal restructurings or reorganizations involving EEC and/or the Company.
Furthermore, the Company and its affiliates may engage in other new business
ventures. Pursuit of any of the above strategies, or any combination thereof,
may significantly affect the business operations and financial condition of the
Company and its affiliates.
NONE OF THE COMPANY, THE BOARD, NOR ANY OF THE COMPANY'S OFFICERS MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER SHARES IN
THE OFFER. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
21
<PAGE>
RATING AGENCIES
Moody's and S&P (the "Rating Agencies") have been advised of the Proposal.
The Rating Agencies have advised the Company that the adoption of the Proposal,
in and of itself, will not result in a reduction of the Outstanding Serial
Preferred Stock's current ratings.
Ratings are not recommendations to purchase, hold or sell shares of the
Outstanding Serial Preferred Stock inasmuch as the ratings do not comment as to
market price or suitability for a particular investor. The ratings are based on
current information furnished to the Rating Agencies by the Company and obtained
from other sources. The ratings may be changed, suspended or withdrawn as a
result of changes in, or the unavailability of, such information.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States federal income tax
considerations with respect to the sale of Shares pursuant to the Offer and the
receipt of Special Cash Payments in connection with the approval of the
Proposal. This summary is based on the Internal Revenue Code of 1986, as amended
to the date hereof (the "Code"), administrative pronouncements, judicial
decisions and existing and proposed Treasury Regulations, changes to any of
which subsequent to the date of this document may adversely affect the tax
consequences described herein, possibly on a retroactive basis. This summary is
addressed to Preferred Shareholders who hold Shares as capital assets within the
meaning of Section 1221 of the Code. This summary does not discuss all of the
tax consequences that may be relevant to a Preferred Shareholder in light of
such Preferred Shareholder's particular circumstances or to Preferred
Shareholders subject to special rules (including certain financial institutions,
tax-exempt organizations, insurance companies, dealers in securities or
currencies, or Preferred Shareholders who acquired their Shares as part of a
hedge or hedging transaction or as a position in a straddle for tax purposes).
PREFERRED SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH REGARD TO THE
APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR
SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION.
As used herein, the term "United States Preferred Shareholder" means (i) a
citizen or resident of the United States for United States federal income tax
purposes; (ii) a corporation or partnership created or organized in or under the
laws of the United States or of any political subdivision thereof; (iii) an
estate the income of which is subject to United States federal income taxation
regardless of its source; or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of such trust and
one or more United States persons have the authority to control all substantial
decisions of such trust. A "Non-United States Preferred Shareholder" is a
Preferred Shareholder that is not a United States Preferred Shareholder.
TAX CONSIDERATIONS FOR TENDERING PREFERRED SHAREHOLDERS
UNITED STATES PREFERRED SHAREHOLDERS. A United States Preferred Shareholder
will recognize a gain or loss equal to the difference between the tax basis of
such Preferred Shareholder's Shares and the amount of cash received in exchange
therefor. A United States Preferred Shareholder's gain or loss will be a capital
gain or loss. Capital gains of individuals derived in respect to capital assets
held for more than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations.
22
<PAGE>
NON-UNITED STATES PREFERRED SHAREHOLDERS. Any capital gain realized upon
the sale of Shares by a Non-United States Preferred Shareholder pursuant to the
Offer generally will not be subject to United States federal income tax unless
(i) such gain is effectively connected with the conduct of a trade or business
in the United States of the Non-United States Preferred Shareholder, or (ii) in
the case of a Non-United States Preferred Shareholder who is an individual, such
individual is present in the United States for 183 days or more in the taxable
year of such sale or exchange and certain other conditions are met. A Non-United
States Preferred Shareholder described in clause (i) above will be taxed on the
net capital gain derived from the sale at applicable graduated individual or
corporate rates. Any such effectively connected income received by a foreign
corporation may be subject to an additional "branch profits tax" at a 30% rate
(or such lower rate as may be specified by an applicable income tax treaty).
Unless an applicable tax treaty provides otherwise, an individual Non-United
States Preferred Shareholder described in clause (ii) above will be subject to a
flat 30% tax on the gain derived from the sale, which may be offset by United
States losses (notwithstanding the fact that the individual is not considered a
resident of the United States).
TAX CONSIDERATIONS FOR NON-TENDERING PREFERRED SHAREHOLDERS
UNITED STATES PREFERRED SHAREHOLDERS. There is no direct authority
concerning the federal income tax consequences of the receipt of Special Cash
Payments. The Company will, for information reporting purposes, treat Special
Cash Payments as ordinary non-dividend income to recipient United States
Preferred Shareholders.
NON-UNITED STATES PREFERRED SHAREHOLDERS. The Company will treat Special
Cash Payments paid to a Non-United States Preferred Shareholder as subject to
withholding of United States federal income tax at a 30% rate. However, Special
Cash Payments that are effectively connected with the conduct of a trade or
business by the Non-United States Preferred Shareholder within the United States
are not subject to the withholding tax (provided such Non-United States
Preferred Shareholder provides two originals of IRS Form 4224 stating that such
Special Cash Payments are so effectively connected), but instead are subject to
United States federal income tax on a net income basis at applicable graduated
individual or corporate rates. Any such effectively connected Special Cash
Payments received by a foreign corporation may be subject to an additional
"branch profits tax" at a 30% rate (or such lower rates as may be specified by
an applicable income tax treaty).
A Non-United States Preferred Shareholder eligible for a reduced rate of
United States withholding tax pursuant to an income tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for refund
with the Internal Revenue Service.
BACKUP WITHHOLDING
ANY UNITED STATES PREFERRED SHAREHOLDER WHO FAILS TO COMPLETE AND SIGN THE
SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE APPLICABLE LETTER OF TRANSMITTAL AND
CONSENT (OR, IN THE CASE OF A NON-UNITED STATES PREFERRED SHAREHOLDER, FORM W-8,
OBTAINABLE FROM THE DEPOSITARY) MAY BE SUBJECT TO REQUIRED FEDERAL INCOME TAX
BACKUP WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH PREFERRED
SHAREHOLDER PURSUANT TO THE OFFER OR, ALTERNATIVELY, THE SPECIAL CASH PAYMENT.
To prevent backup withholding, a United States Preferred Shareholder must
provide the Depositary with the Preferred Shareholder's correct taxpayer
identification number and certify that the Preferred Shareholder is not subject
to backup withholding of federal income tax by completing the Substitute Form
W-9 included in the applicable Letter of Transmittal and Consent. Certain
Preferred Shareholders (including, among others, all corporations and certain
foreign shareholders) are exempt from backup withholding. For a corporate United
States Preferred Shareholder to qualify for such exemption, such Preferred
Shareholder must provide the Depositary with a properly completed and executed
Substitute Form W-9 attesting to its exempt status. In
23
<PAGE>
order for a Non-United States Preferred Shareholder to qualify as an exempt
recipient, the Non-United States Preferred Shareholder must submit a Form W-8,
Certificate of Foreign Status, signed under penalties of perjury, attesting to
that Preferred Shareholder's exempt status. A copy of Form W-8 may be obtained
from the Depositary. Any amount paid to Non-United States Preferred Shareholders
that is subject to the 31% backup withholding will not be subject to the 30%
withholding tax discussed above under "Tax Considerations for Non-Tendering
Preferred Shareholders--Non-United States Preferred Shareholders."
The amount of any backup withholding from a payment to a Preferred
Shareholder will be allowed as a credit against such Preferred Shareholder's
United States federal income tax liability and may entitle such Preferred
Shareholder to a refund, provided that the required information is furnished to
the Internal Revenue Service.
SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases all outstanding Shares pursuant to the
Offer, the total amount required by the Company to purchase such Shares will be
approximately $ million, including fees and other expenses. The Company
intends to fund the Offer through the issuance of commercial paper.
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES
Based upon the Company's records and upon information provided to the
Company by its directors and executive officers, neither the Company nor any of
its affiliates, directors or executive officers, or associates of the foregoing,
has engaged in any transactions involving Shares during the 40 business days
preceding the date hereof. Neither the Company nor, to the knowledge of the
Company, any of its directors or executive officers or an associate of the
foregoing, is a party to any contract, arrangement, understanding or
relationship relating directly or indirectly to the Offer with any other person
or entity with respect to any securities of the Company.
FEES AND EXPENSES
DEALER MANAGER FEES. Salomon Smith Barney Inc. will act as Dealer Manager
for the Company in connection with the Offer. The Company has agreed to pay the
Dealer Manager a fee of an amount equal to $.50 per Share for any Shares
tendered, accepted for payment and paid for pursuant to the Offer and $.50 per
Share for any Shares with respect to which a consent is granted but not tendered
pursuant to the Offer. The Dealer Manager will also be reimbursed by the Company
for its reasonable out-of-pocket expenses and will be indemnified against
certain liabilities, including certain liabilities under the federal securities
laws, in connection with the Offer and the Consent Solicitation. The Dealer
Manager has rendered, is currently rendering and is expected to continue to
render various investment banking services to the Company. The Dealer Manager
has received, and will continue to receive, customary compensation from the
Company for such services.
The Company has retained ChaseMellon Shareholder Services, L.L.C., as
Depositary, and Georgeson & Company, Inc., as Information Agent, in connection
with the Offer and the Consent Solicitation. The Depositary and Information
Agent will receive reasonable and customary compensation for their services and
will also be reimbursed for reasonable out-of-pocket expenses, including
attorney fees. Neither the Depositary nor the Information Agent has been
retained to make solicitations or recommendations in connection with the Offer
and the Consent Solicitation.
SOLICITED TENDER FEES. The Company will pay a solicitation fee to
Soliciting Dealers of an amount equal to $1.50 per Share for Shares that are
tendered, accepted for payment and paid for pursuant to the Offer (except that
for transactions for beneficial owners whose ownership equals or exceeds 2,500
Shares, the Company will pay a solicitation fee equal to $1.00 per Share). If
the Proposal is approved, the Company will pay a solicitation fee to Soliciting
Dealers of $.50 per Share for Shares that are not tendered pursuant to the Offer
but in respect of which a consent to the Proposal is granted. With respect to
fees
24
<PAGE>
payable pursuant to this paragraph involving transactions for beneficial owners
whose ownership is less than 2,500 Shares, any fees payable hereunder shall be
paid in full to the Dealer Manager unless a Soliciting Dealer is designated (as
herein described), in which case such fee shall be payable in full to such
designated Soliciting Dealer (which designated Soliciting Dealer may be the
Dealer Manager). With respect to fees payable pursuant to this paragraph
involving transactions for beneficial owners whose ownership equals or exceeds
2,500 Shares, any fees payable hereunder shall be paid in full to the Dealer
Manager unless a Soliciting Dealer is designated, in which case 80% of such fee
shall be paid to the Dealer Manager and 20% of such fee shall be paid to the
designated Soliciting Dealer (which designated Soliciting Dealer may be the
Dealer Manager).
A designated Soliciting Dealer is an entity obtaining the tender and/or
consent, if the applicable Letter of Transmittal and Consent shall include its
name under the heading "Solicited Tenders and/or Consents," and it is (a) any
broker or dealer in securities, including the Dealer Manager in its capacity as
a dealer or broker, which is a member of any national securities exchange or of
the NASD, (b) any foreign broker or dealer not eligible for membership in the
NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting
tenders outside the United States to the same extent as though it were an NASD
member, or (c) any bank or trust company.
No such solicitation fee shall be payable to a Soliciting Dealer with
respect to the tender and/or consent of Shares by a holder unless the Letter of
Transmittal and Consent accompanying such tender and/ or consent designates such
Soliciting Dealer. No such fee shall be paid to a Soliciting Dealer with respect
to Shares tendered or for which a consent has been granted for such Soliciting
Dealer's own account. If tendered Shares or Shares for which a consent has been
granted are registered in the name of such Soliciting Dealer, no such fee shall
be payable unless such Shares are held by such Soliciting Dealer as nominee and
such Shares are being tendered, and/or a consent is being granted for the
benefit of one or more beneficial owners identified on the applicable Letter of
Transmittal and Consent and such beneficial owner has designated such Soliciting
Dealer. Beneficial owners should complete the "Solicited Tenders and/or
Consents" box in the accompanying Letter of Transmittal and Consent to designate
a Soliciting Dealer. No such fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer the amount of such fee
to a depositing holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of the Company, the
Depositary, the Information Agent or the Dealer Manager for purposes of the
Offer and Consent Solicitation.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b) and (c) above even when the activities of such organizations in
connection with the Offer and Consent Solicitation consist solely of forwarding
to clients materials relating to the Offer and Consent Solicitation, including
the applicable Letter of Transmittal and Consent, and tendering Shares or
granting consents as directed by beneficial owners thereof. No Soliciting Dealer
is required to make any recommendation to holders of Shares as to whether to
tender or refrain from tendering in the Offer or whether to grant or refrain
from granting a consent. No assumption is made, in making payment to any
Soliciting Dealer, that its activities in connection with the Offer included any
activities other than those described above, and for all purposes noted in all
materials relating to the Offer, the term "solicit" shall be deemed to mean no
more than "processing shares tendered or consents" or "forwarding to customers
materials regarding the Offer and Consent Solicitation."
By accepting any solicitation fee, a person shall be deemed to have
represented that: (i) it has complied with the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (ii) it is
entitled to such compensation for such solicitation under the terms and
conditions of the Offer; (iii) in soliciting tenders of Shares, it has used no
soliciting materials other than those furnished by the Company; and (iv) if it
is a foreign broker or dealer not eligible for membership in the NASD, it has
agreed to conform to the NASD's Rules of Fair Practice in making solicitations.
STOCK TRANSFER TAXES. The Company will pay all stock transfer taxes, if
any, payable on account of the acquisition of Shares by the Company pursuant to
the Offer, except in certain circumstances where special payment or delivery
procedures are utilized pursuant to Instruction 6 of the accompanying Letter of
Transmittal and Consent.
25
<PAGE>
CERTAIN INFORMATION REGARDING THE COMPANY
The Company is a combination electric and gas utility company engaged in the
business of transmitting and delivering electricity, transporting and delivering
natural gas and generating electricity from its nuclear and hydroelectric
stations. The service territory, most of which is located outside the corporate
limits of cities, is in the central, eastern and western parts of the State of
New York. The service territory has an area of approximately 19,800 square miles
and a population of approximately 2,400,000. The mailing address of the
principal executive office of the Company is P.O. Box 3287, Ithaca, New York,
14852-3287, and the telephone number is (607) 347-4131.
On May 1, 1998, EEC became the parent of the Company pursuant to an
Agreement and Plan of Share Exchange between EEC and the Company. Each share of
the Company's outstanding common stock was exchanged for one share of EEC's
common stock. The Company's common stock was then delisted from the NYSE. The
serial preferred stock and debt of the Company were not exchanged and remain
securities of the Company.
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports and other information with the
Commission. Such reports and other information may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511; and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company. Such information about the Company is also
available at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
In connection with the Offer, the Company has filed an Issuer Tender Offer
Statement on Schedule 13E-4 with the Commission that includes certain additional
information relating to the Offer. The Company's Schedule 13E-4 will not be
available at the Commission's regional offices.
SUMMARY OF FINANCIAL INFORMATION
Set forth below is certain historical financial information of the Company.
The historical financial information (other than the ratios of earnings to fixed
charges) was derived from the audited financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 and
from the unaudited financial statements included in the Company's Quarterly
Reports on Form 10-Q for the periods ended September 30, 1998 and September 30,
1997. Additional financial information is incorporated by reference herein as
described below.
<TABLE>
<CAPTION>
NINE MONTHS (UNAUDITED)
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------- --------------------------
1997 1996 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating Revenue (000).................................. $ 2,129,989 $ 2,067,532 $ 1,531,851 $ 1,551,336
Net Income (000)......................................... $ 184,553 $ 178,241 $ 156,408 $ 136,529
Ratio of Earnings to Fixed Charges....................... 3.38 3.24 3.82 3.46
Ratio of Earnings to Fixed Charges
and Preferred Stock Dividends.......................... 3.22 3.09 3.64 3.29
Utility Plant, net (000)................................. $ 3,870,168 $ 3,924,079 $ 2,744,866 $ 3,868,083
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1998 ($000)
--------------------
<S> <C> <C>
Long-term Debt....................................................... $1,414,297 57.8%
Preferred Stock...................................................... $ 129,440 5.3%
Common Equity........................................................ $ 903,049 36.9%
--------- ---------
Total Capitalization (excluding current maturities).............. $2,446,786 100.0%
</TABLE>
INCORPORATION OF ADDITIONAL INFORMATION
The financial statements of the Company and related information included in
its Annual Report on Form 10-K for the year ended December 31, 1997, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30,
1998 and September 30, 1998, each as filed with the Commission, are hereby
incorporated by reference. All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this document and prior to the Expiration Date shall be deemed to be
incorporated by reference 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 document to the extent that a statement contained herein or
in any other subsequently filed document which is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this document.
The Company will provide without charge to each person to whom a copy of
this document has been delivered, on the written or oral request of any such
person, a copy of any or all of its documents described above which have been
incorporated or are deemed to be incorporated by reference in this document,
other than exhibits to such documents. Such requests should be directed to
Shareholder Services, New York State Electric & Gas Corporation, P.O. Box 3200,
Ithaca, New York 14852-3200, telephone number (800) 225-5643. The information
relating to the Company contained in this document does not purport to be
comprehensive and should be read together with the information contained in the
documents incorporated or deemed to be incorporated by reference.
MISCELLANEOUS
The Offer is not being made to, nor will the Company accept tenders from,
owners of Shares in any jurisdiction in which the Offer or its acceptance would
not be in compliance with the laws of such jurisdiction. The Company is not
aware of any jurisdiction where the making of the Offer or the tender of Shares
would not be in compliance with applicable law. If the Company becomes aware of
any jurisdiction where the making of the Offer or if the tender of Shares is not
in compliance with any applicable law, the Company will make a good faith effort
to comply with such law. If, after such good faith effort, the Company cannot
comply with such law, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the owners of Shares residing in such
jurisdiction. In any jurisdiction in which the securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer will
be deemed to be made on the Company's behalf by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NEW YORK STATE ELECTRIC & GAS CORPORATION
27
<PAGE>
QUESTIONS AND REQUESTS FOR ASSISTANCE
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT OR THE DEALER MANAGER AT THEIR RESPECTIVE TELEPHONE NUMBERS AND ADDRESSES
LISTED BELOW. REQUESTS FOR ADDITIONAL COPIES OF THIS OFFER TO PURCHASE AND
CONSENT STATEMENT, THE LETTER OF TRANSMITTAL AND CONSENT OR OTHER TENDER OFFER
OR CONSENT MATERIALS SHOULD BE DIRECTED TO THE INFORMATION AGENT, AND SUCH
COPIES WILL BE FURNISHED PROMPTLY AT THE COMPANY'S EXPENSE. PREFERRED
SHAREHOLDERS MAY ALSO CONTACT THEIR BROKER, DEALER, COMMERCIAL BANK OR TRUST
COMPANY FOR ASSISTANCE CONCERNING THE OFFER.
THE DEALER MANAGER:
SALOMON SMITH BARNEY
390 Greenwich Street
New York, New York 10013
Attention: Liability Management Group
(800) 558-3745
THE INFORMATION AGENT:
GEORGESON & COMPANY, INC.
[address]
[(800) 223-2064 (toll free)
or
Banks and Brokers call:
(212) ]
FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL AND CONSENT WILL NOT BE
ACCEPTED. THE LETTER OF TRANSMITTAL AND CONSENT, TOGETHER WITH ANY OTHER
REQUIRED DOCUMENTS, AND, IF APPLICABLE, CERTIFICATES FOR SHARES MUST BE SENT OR
DELIVERED BY EACH TENDERING OR CONSENTING PREFERRED SHAREHOLDER TO THE
DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH BELOW:
THE DEPOSITARY:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Road-Mail
South Hackensack, NJ 07606 New York, NY 10271 Drop-Reorg
Attn: Reorganization Attn: Reorganization Ridgefield Park, NJ 07660
Department Department Attn: Reorganization
Department
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL AND CONSENT
TO ACCOMPANY
SHARES OF PAR VALUE $100 PER SHARE
(THE "SHARES") CUSIP NUMBER
OF
NEW YORK STATE ELECTRIC & GAS CORPORATION
TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH
AT A PURCHASE PRICE OF $ PER SHARE
AND/OR
VOTED PURSUANT TO THE CONSENT STATEMENT OF
NEW YORK STATE ELECTRIC & GAS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED
(THE "EXPIRATION DATE").
TO: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., DEPOSITARY
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND BY OVERNIGHT COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Road--Mail Drop-
South Hackensack, NJ 07606 New York, NY 10271 Reorg
Attn: Reorganization Attn: Reorganization Ridgefield Park, NJ 07660
Department Department Attn: Reorganization
Department
</TABLE>
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) AND ADDRESS(ES) APPEAR(S) ON CERTIFICATE(S))
- --------------------------------------------------------------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL AND CONSENT TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL AND CONSENT IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND
COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW OR A FORM W-8, AS APPLICABLE.
SEE INSTRUCTION 8 AND "IMPORTANT TAX INFORMATION" BELOW.
YOU MUST CHECK ONE BOX:
/ / I AM TENDERING AND CONSENTING
/ / I AM CONSENTING ONLY.
If you are tendering some Shares you hold and only consenting with respect
to other Shares you hold, you must submit two separate Letters of Transmittal
and Consent, one with respect to the tendered Shares and one with respect to the
Shares for which you are only consenting.
DO NOT SEND ANY CERTIFICATES OR DOCUMENTS TO SALOMON SMITH BARNEY, GEORGESON
& COMPANY, INC., NEW YORK STATE ELECTRIC & GAS CORPORATION (THE "COMPANY") OR
THE BOOK-ENTRY TRANSFER FACILITY.
THIS LETTER OF TRANSMITTAL AND CONSENT IS ONLY FOR THE SERIES. BE SURE
THAT THIS IS THE SERIES OF PREFERRED WITH RESPECT TO WHICH YOU ARE TENDERING
HEREWITH OR GRANTING A CONSENT HEREBY.
<PAGE>
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND CONSENT SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND CONSENT IS COMPLETED. IF
YOU HAVE ANY QUESTIONS, HAVE NOT RECEIVED THE OFFER TO PURCHASE AND CONSENT
STATEMENT DATED , 1999 (WHICH TOGETHER WITH THIS LETTER OF
TRANSMITTAL AND CONSENT CONSTITUTE THE "OFFER") OR OTHER DOCUMENTS PERTAINING TO
THE OFFER OR NEED ASSISTANCE IN COMPLETING THIS LETTER OF TRANSMITTAL AND
CONSENT, PLEASE CONTACT GEORGESON & COMPANY, INC., THE INFORMATION AGENT, AT
TELEPHONE (800) 223-2064 (TOLL FREE). BANKS AND BROKERS SHOULD CALL
.
PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER
MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED CONSENT TO THE PROPOSAL.
HOWEVER, IT IS NOT NECESSARY TO TENDER SHARES IN ORDER TO CONSENT TO THE
PROPOSAL. INCLUDED IN THIS LETTER OF TRANSMITTAL AND CONSENT IS A FORM FOR
GRANTING SUCH CONSENT.
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO BECOME HOLDERS OF RECORD OF SHARES AFTER , 1999 (THE
"RECORD DATE") AND WHO WISH TO TENDER SUCH SHARES MUST OBTAIN AND SUBMIT WITH
THEIR TENDER AN IRREVOCABLE PROXY FROM THE HOLDER OF RECORD OF SUCH SHARES AS OF
THE RECORD DATE IN ORDER TO GRANT THEIR CONSENT TO THE PROPOSAL. INCLUDED IN THE
MATERIALS YOU RECEIVED IS A FORM THAT MAY BE USED TO OBTAIN SUCH IRREVOCABLE
PROXY.
IF, BUT ONLY IF, A PREFERRED SHAREHOLDER CONSENTS TO THE PROPOSAL WITH
RESPECT TO SHARES BUT DOES NOT TENDER THOSE SHARES PURSUANT TO THE OFFER AND THE
PROPOSAL IS APPROVED, THE COMPANY WILL MAKE A SPECIAL CASH PAYMENT TO SUCH
PREFERRED SHAREHOLDER IN AN AMOUNT EQUAL TO $ FOR EACH SUCH SHARE (THE
"SPECIAL CASH PAYMENT"). THOSE PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR
SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED ON THE FIRST
PAGE HEREOF AND WILL NOT BE ENTITLED TO THE SPECIAL CASH PAYMENT.
NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
NOTE: IF YOU ARE VOTING ON THE PROPOSAL BUT NOT TENDERING SHARES, DO NOT
SEND ANY SHARE CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND CONSENT. THIS
LETTER OF TRANSMITTAL AND CONSENT MUST BE USED TO GRANT CONSENT TO THE PROPOSAL
EVEN IF NO SHARES ARE BEING TENDERED.
NOTE: THE FOLLOWING ACTIONS WILL HAVE THE SAME EFFECT AS WITHHOLDING CONSENT
TO THE PROPOSAL: (A) FAILING TO EXECUTE, DATE AND RETURN A CONSENT FORM OR (B)
EXECUTING, DATING AND RETURNING A CONSENT FORM MARKED "WITHHOLD CONSENT" OR
"ABSTAIN" AS TO THE PROPOSAL. IF RETURNED CONSENT FORMS ARE EXECUTED AND DATED
BUT NOT MARKED WITH RESPECT TO THE PROPOSAL, THE SHAREHOLDER WILL BE DEEMED TO
HAVE CONSENTED TO THE PROPOSAL.
This Letter of Transmittal and Consent must be completed even if delivery of
tendered Shares is to be made by book-entry transfer to the Depositary's account
at The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility").
Preferred Shareholders who wish to tender Shares but who cannot deliver
their Shares and all other documents required hereby to the Depositary by the
Expiration Date must tender their Shares pursuant to the guaranteed delivery
procedure set forth under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Consent Statement. See
Instruction 2.
2
<PAGE>
PLEASE COMPLETE:
DESCRIPTION OF SHARES TENDERED AND/OR WITH RESPECT TO
WHICH CONSENTS ARE GRANTED
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
<TABLE>
<CAPTION>
NUMBER OF SHARES NOT
TOTAL NUMBER OF TENDERED BUT AS TO
CERTIFICATE SHARES REPRESENTED BY NUMBER OF WHICH CONSENTS ARE
NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED** GIVEN ONLY
- ------------------------------------ ------------------------- --------------------- -------------------------
<S> <C> <C> <C>
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificate delivered to the Depositary are being tendered. See
Instruction 4. You must grant consent to the Proposal with respect to any
Shares tendered.
If any of your certificate(s) for Shares have been lost, stolen or
destroyed, please call the Depositary at 800-777-3674 (toll free). You may need
to complete an Affidavit of Loss with respect to the lost certificate(s) (which
will be provided by the Depositary) and payment of an indemnity bond premium fee
may be required.
/ / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
A HOLDER TENDERING SHARES PURSUANT TO THIS LETTER OF TRANSMITTAL AND CONSENT
MUST RETURN A DULY COMPLETED, VALID AND UNREVOKED CONSENT INDICATING A GRANT OF
CONSENT TO THE PROPOSAL.
3
<PAGE>
<TABLE>
<S> <C>
ELIGIBLE INSTITUTIONS OR BROKERS TO COMPLETE ONLY IF APPLICABLE:
NOTE: THIS LETTER OF TRANSMITTAL AND CONSENT MAY RELATE TO ONLY ONE DELIVERY BY BOOK ENTRY
TRANSFER, AND THUS ONLY ONE VOI NUMBER MAY BE SUPPLIED BELOW. SEPARATE LETTERS OF TRANSMITTAL AND
CONSENT MUST BE USED FOR EACH DELIVERY BY BOOK ENTRY TRANSFER.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER AND COMPLETE
THE FOLLOWING:
Name of tendering institution
Account No. at DTC
VOI No. (only one)
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY AND CONSENT PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of tendering shareholder(s)
Date of execution of Notice of Guaranteed Delivery and Consent
Name of institution that guaranteed delivery
IF DELIVERY IS BY BOOK-ENTRY TRANSFER:
Name of tendering institution
Account No. at DTC
VOI No. (only one)
</TABLE>
CONSENT FORM
The undersigned, the holder of record as of the Record Date of the Shares
listed above in the box designated "Description of Shares Tendered and/or with
Respect to Which Consents are Granted" (or persons obtaining an irrevocable
proxy from such holder), hereby acknowledges receipt of the Offer to Purchase
and Consent Statement dated , 1999 and consents without a meeting,
pursuant to the Company's Restated Certificate of Incorporation, as amended,
with respect to all of such Shares, to the adoption of the following Proposal.
THE BOARD OF DIRECTORS URGES YOU TO CONSENT TO THE PROPOSAL.
THE PROPOSAL: Consent to the issuance by the Company of up to $ of
unsecured indebtedness in excess of the Present Limitation as set forth in the
Offer to Purchase and Consent Statement dated , 1999.
/ / CONSENT / / WITHHOLD CONSENT / / ABSTAIN
INDICATE YOUR VOTE BY AN (X).
IF RETURNED CONSENT FORMS ARE EXECUTED AND DATED BUT NOT MARKED WITH RESPECT
TO THE PROPOSAL, THE SHAREHOLDER WILL BE DEEMED TO HAVE CONSENTED TO THE
PROPOSAL.
Any holder of Shares held of record as of the Record Date in the name of
another holder must establish to the satisfaction of the Company his or her
entitlement to exercise or transfer this consent. This will ordinarily require
an irrevocable proxy by such record holder to and from each successive
transferee, including the holder, with each signature guaranteed by an Eligible
Institution (as defined in the Offer to Purchase and Consent Statement). A form
of irrevocable proxy has been provided herewith.
4
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, and/or consents with respect
to, the Shares in the amount set forth in the box above designated "Description
of Shares Tendered and/or with Respect to Which Consents are Granted" pursuant
to the Company's offer to purchase any and all of the outstanding Shares of the
series of serial preferred stock of the Company, shown on the first page hereof
as to which this Letter of Transmittal and Consent is applicable, at the
purchase price per Share shown on the first page hereof, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase and Consent Statement, dated , 1999, receipt of which is
hereby acknowledged, and in this Letter of Transmittal and Consent. PREFERRED
SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST SUBMIT A
DULY COMPLETED, VALID AND UNREVOKED CONSENT TO THE PROPOSAL. HOWEVER, IT IS NOT
NECESSARY TO TENDER SHARES IN ORDER TO CONSENT TO THE PROPOSAL. THE OFFER IS
CONDITIONED UPON, AMONG OTHER THINGS, THE APPROVAL OF THE PROPOSAL BY HOLDERS OF
AT LEAST A MAJORITY OF THE VOTES OF SHARES OF THE OUTSTANDING SERIAL PREFERRED
STOCK ENTITLED TO BE CAST, CONSIDERED TOGETHER AS ONE CLASS. See "Proposal and
Consent Solicitation," "Terms of the Offer--Termination; Amendments" and "Terms
of the Offer-- Conditions of the Offer" in the Offer to Purchase and Consent
Statement.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to all the Shares that are being tendered hereby and
hereby constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares, with full power
of substitution (such power of attorney being an irrevocable power coupled with
an interest), to (a) deliver certificates for such Shares, or transfer ownership
of such Shares on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case with all accompanying evidences of transfer
and authenticity, to or upon the order of the Company, (b) present such Shares
for registration and transfer on the books of the Company and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares, all in accordance with the terms of the Offer. The Depositary will act
as agent for tendering shareholders for the purpose of receiving payment from
the Company and transmitting payment to tendering shareholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and to grant consent with respect to the Shares indicated herein and
that, when and to the extent the same are accepted for payment by the Company,
the Company will acquire good, marketable and unencumbered title thereto, free
and clear of all liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
the same will not be subject to any adverse claims. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Depositary
or the Company to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death, bankruptcy or incapacity of the
undersigned, and any obligations of the undersigned hereunder shall be binding
upon the heirs, legal representatives, successors, assigns, executors and
administrators of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Consent Statement and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer, including the undersigned's representation and
warranty that (a) the
5
<PAGE>
undersigned has a net long position in the Shares being tendered within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, and (b) the tender of such Shares complies with such Rule 14e-4. The
Company's acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase and Consent Statement, the Company may terminate or amend
the Offer or may not be required to purchase any of the Shares tendered hereby.
In either event, the undersigned understands that certificate(s) for any Shares
not tendered or not purchased will be returned to the undersigned.
Unless otherwise indicated in the box below under the heading "Special
Payment Instructions," please issue the check for the purchase price of any
Shares purchased, and/or return any Shares not tendered or not purchased, in the
name(s) of the undersigned (and, in the case of Shares tendered by book-entry
transfer, by credit to the account of the undersigned at the Book-Entry Transfer
Facility). Similarly, unless otherwise indicated in the box below under the
heading "Special Delivery Instructions," please mail the check for the purchase
price of any Shares purchased and/or any certificate for Shares not tendered or
not purchased (and accompanying documents, as appropriate) to the undersigned at
the address shown below the undersigned's signature(s). In the event that both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the check for the purchase price of any Shares purchased
and/or return any Shares not tendered or not purchased in the name(s) of, and
mail said check and/or any certificates to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder(s) thereof if the Company does not accept for purchase any of
the Shares so tendered.
COMPLETE ONLY IF APPLICABLE:
- -------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased, the certificates for Shares not tendered or not purchased or the
check for the Special Cash Payment are to be issued in the name of someone
other than the undersigned.
Issue / / Check and/or
/ / Certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
- -------------------------------------------
- -------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased, the certificates for Shares not tendered or not purchased or the
check for the Special Cash Payment are to be mailed to someone other than
the undersigned at an address other than that shown below the undersigned's
signature(s).
Mail / / Check and/or
/ / Certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
- -----------------------------------------------------
Tax Identification or Social Security No(s).: __________________________________
6
<PAGE>
SIGNATURE(S)
X ______________________________________________________________________________
X ______________________________________________________________________________
Dated: __________________________________________________________________, 1999.
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
(Must be signed by holder(s) exactly as name(s) appear(s) as of the Record Date
on certificate(s) for the Shares or on a security position listing or by
person(s) authorized to become holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation, agent or other person
acting in a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
DAYTIME Area Code and Telephone No.: ___________________________________________
PLEASE COMPLETE IF APPLICABLE:
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
Name of Firm: __________________________________________________________________
Address of Firm: _______________________________________________________________
Area Code and Telephone No.: ___________________________________________________
Dated: ___________________________________________________________________, 1999
PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW
OR A FORM W-8, AS APPLICABLE
LOST CERTIFICATES BOX
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN
AND WISH TO TENDER HAVE BEEN LOST, DESTROYED OR STOLEN. (SEE INSTRUCTION
11).
Number of Shares represented by lost, destroyed or stolen certificates: ________
7
<PAGE>
COMPLETE ONLY IF APPLICABLE:
SOLICITED TENDERS AND/OR CONSENTS
The Company will pay a solicitation fee to Soliciting Dealers (as defined in
the Offer to Purchase and Consent Statement) of an amount equal to $1.50 per
Share for Shares that are tendered, accepted for payment and paid for pursuant
to the Offer (except that for transactions for beneficial owners whose ownership
equals or exceeds 2,500 Shares, the Company will pay a solicitation fee equal to
$1.00 per Share). If the Proposal is approved, the Company will pay a
solicitation fee to Soliciting Dealers of $.50 per Share for Shares that are not
tendered pursuant to the Offer but in respect of which a consent to the Proposal
is granted. With respect to fees payable pursuant to this paragraph involving
transactions for beneficial owners whose ownership is less than 2,500 Shares,
any fees payable hereunder shall be paid in full to the Dealer Manager unless a
Soliciting Dealer is designated (as herein described), in which case such fee
shall be payable in full to such designated Soliciting Dealer (which designated
Soliciting Dealer may be the Dealer Manager). With respect to fees payable
pursuant to this paragraph involving transactions for beneficial owners whose
ownership equals or exceeds 2,500 Shares, any fees payable hereunder shall be
paid in full to the Dealer Manager unless a Soliciting Dealer is designated, in
which case 80% of such fee shall be paid to the Dealer Manager and 20% of such
fee shall be paid to the designated Soliciting Dealer (which designated
Soliciting Dealer may be the Dealer Manager).
A designated Soliciting Dealer is an entity obtaining the tender and/or
consent, if this Letter of Transmittal and Consent shall include its name under
the heading "Solicited Tenders and/or Consents," and it is (a) any broker or
dealer in securities, including the Dealer Manager in its capacity as a dealer
or broker, which is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), (b) any foreign
broker or dealer not eligible for membership in the NASD which agrees to conform
to the NASD's Rules of Fair Practice in soliciting tenders outside the United
States to the same extent as though it were an NASD member, or (c) any bank or
trust company.
The abovesigned represents that the Soliciting Dealer which solicited and
obtained this tender and/or consent is:
Name of Firm: __________________________________________________________________
(PLEASE PRINT)
Name of Individual Broker: _____________________________________________________
Telephone Number of Broker: ____________________________________________________
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
If Shares specified in this Letter of Transmittal and Consent are held by
the abovesigned as custodian, specify below each beneficial owner of such Shares
whose tender and/or consent you have solicited. Any questions as to what
constitutes beneficial ownership should be directed to the Depositary. If the
space below is inadequate, attach a separate signed schedule using the same
format.
<TABLE>
<S> <C> <C>
Name of Number of Shares if Number of Shares if
Beneficial Owner Less Than 2,500 2,500 or More
- ---------------------------- ---------------------------- ----------------------------
- ---------------------------- ---------------------------- ----------------------------
- ---------------------------- ---------------------------- ----------------------------
- ---------------------------- ---------------------------- ----------------------------
- ---------------------------- ---------------------------- ----------------------------
- ---------------------------- ---------------------------- ----------------------------
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (b) it is entitled
to such compensation for such solicitation under the terms and conditions of the
Offer to Purchase and Consent Statement; (c) in soliciting a tender and/or
consent of Shares, it has used no solicitation materials other than those
furnished by the Company; and (d) if it is a foreign broker or dealer not
eligible for
8
<PAGE>
membership in the NASD, it has agreed to conform to the NASD's Rules of Fair
Practice in making solicitations.
SOLICITATION FEE PAYMENT INSTRUCTIONS
ISSUE CHECK TO:
Firm____________________________________________________________________________
(Please Print)
Attention_______________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Phone Number____________________________________________________________________
Taxpayer Identification or Social Security No. _________________________________
Applicable VOI Number__________ Number of Shares__________
IF SOLICITATION FEES ARE TO BE PAID TO ANOTHER ELIGIBLE INSTITUTION(S),
PLEASE COMPLETE THE FOLLOWING BOXES:
ISSUE CHECK TO:
Firm____________________________________________________________________________
(Please Print)
Attention_______________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Phone Number____________________________________________________________________
Taxpayer Identification or Social Security No.__________________________________
Applicable VOI Number_____________ Number of Shares_____________
Series_____________
ISSUE CHECK TO:
Firm____________________________________________________________________________
(Please Print)
Attention_______________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Phone Number____________________________________________________________________
Taxpayer Identification or Social Security No.__________________________________
Applicable VOI Number_____________ Number of Shares_____________
Series_____________
NOTE: IF ADDITIONAL PAYMENT INSTRUCTIONS, PLEASE COPY AND ATTACH.
9
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. In general, all signatures on this Letter of
Transmittal and Consent must be guaranteed by a firm that is a member of a
registered national securities exchange or the NASD, or by a commercial bank or
trust company having an office or correspondent in the United States that is a
participant in an approved Signature Guarantee Medallion Program (each of the
foregoing being referred to as an "Eligible Institution"). However, signatures
on this Letter of Transmittal and Consent need not be guaranteed if (a) this
Letter of Transmittal and Consent is signed by the registered owner of the
Shares tendered herewith and such owner has not completed the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal and Consent, (b) such Shares are
tendered for the account of an Eligible Institution, or (c) this Letter of
Transmittal and Consent is being used solely for the purpose of voting with
respect to Shares which are not being tendered pursuant to the Offer. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CONSENT AND DELIVERY OF
SHARES. This Letter of Transmittal and Consent is to be used if (a)
certificates are to be forwarded herewith, (b) delivery of Shares is to be made
by book-entry transfer pursuant to the procedures set forth under the heading
"Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase
and Consent Statement and/or (c) Shares are being voted on the Proposal. To
validly tender, certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well as
a properly completed and duly executed Letter of Transmittal and Consent, and
any other documents required by this Letter of Transmittal and Consent, must be
received by the Depositary at one of its addresses set forth on the front page
of this Letter of Transmittal and Consent on or prior to the Expiration Date (as
defined in the Offer to Purchase and Consent Statement) with respect to all
Shares; provided, however, that Preferred Shareholders who wish to tender their
Shares but who cannot deliver their Shares and all other required documents to
the Depositary on or prior to the Expiration Date must tender their Shares
pursuant to the guaranteed delivery procedure set forth under the heading "Terms
of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and
Consent Statement. A separate Notice of Guaranteed Delivery and Consent form has
been provided in order to comply with the guaranteed delivery procedure.
A Preferred Shareholder who is the beneficial owner of shares which are held
by a broker, dealer, commercial bank, trust company or nominee must contact such
broker, dealer, commercial bank, trust company or nominee to either (i) arrange
for the record transfer of Shares to such Preferred Shareholder prior to
tendering or (ii) direct such Shares be properly tendered (including granting a
consent in respect thereof) on behalf of such Preferred Shareholder.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE PREFERRED SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BECAUSE IT
IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES WHETHER A
TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. See
"Terms of the Offer--Number of Shares; Purchase Prices" in the Offer to Purchase
and Consent Statement. By executing this Letter of Transmittal and Consent, the
tendering shareholder waives any right to receive any notice of the acceptance
for payment of the Shares.
3. VOTING. PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT
TO THE OFFER MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED CONSENT TO THE
PROPOSAL. HOWEVER, IT IS NOT NECESSARY TO TENDER SHARES IN ORDER TO CONSENT TO
THE PROPOSAL. By executing a Notice of Guaranteed Delivery and
10
<PAGE>
Consent, a Preferred Shareholder is deemed to have tendered the Shares described
in such Notice of Guaranteed Delivery and Consent and to have granted consent to
the Proposal in accordance with the consent contained therein. IF CONSENT FORMS
CONTAINED WITHIN THIS LETTER OF TRANSMITTAL AND CONSENT (OR WITHIN A NOTICE OF
GUARANTEED DELIVERY AND CONSENT) ARE EXECUTED AND DATED BUT NOT MARKED WITH
RESPECT TO THE PROPOSAL, THE SHAREHOLDER WILL BE DEEMED TO HAVE CONSENTED TO THE
PROPOSAL. The Offer is being sent to all persons in whose names Shares are
registered on the books of the Company as of the close of business on
, 1999, as well as to all persons in whose name Shares are
registered on the books of the Company as of the Record Date. Preferred
Shareholders who become holders of record of Shares after the Record Date and
who wish to tender such Shares must obtain and submit with their tender an
irrevocable proxy from the holder of record as of the Record Date in order to
grant their consent to the Proposal. Any holder of Shares held of record as of
the Record Date in the name of another must establish to the satisfaction of the
Company his or her entitlement to exercise or transfer such consent. This will
ordinarily require an irrevocable proxy by such record holder to and from each
successive transferee, including the holder, with each signature guaranteed by
an Eligible Institution. See Instruction 5. A form that may be used to obtain
such irrevocable proxy is included in the materials you received.
4. PARTIAL TENDER (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box above under the heading "Description of
Shares Tendered." In such case, a new certificate for the remainder of the
Shares represented by the old certificate will be sent to the person(s) signing
this Letter of Transmittal and Consent, unless otherwise provided in the box
above under the heading "Special Payment Instructions" or "Special Delivery
Instructions," as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON THIS LETTER OF TRANSMITTAL AND CONSENT AND/OR NOTICE OF
GUARANTEED DELIVERY AND CONSENT; STOCK POWERS AND ENDORSEMENTS. If either this
Letter of Transmittal and Consent or the Notice of Guaranteed Delivery and
Consent (together, the "Tender and Consent Documents") is signed by the
registered holder(s) of the Shares tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificates without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered or voted under either Tender and Consent
Document are held of record by two or more persons, all such persons must sign
such Tender and Consent Document.
If any of the Shares tendered or voted under either Tender and Consent
Document are registered in different names or different certificates, it will be
necessary to complete, sign and submit as many separate applicable Tender and
Consent Documents as there are different registrations or certificates.
If either Tender and Consent Document is signed by the registered holder(s)
of the Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s). Signatures on any certificates or
stock powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal and Consent is signed by a person other than
the registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificate or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If either Tender and Consent Document or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a
11
<PAGE>
fiduciary or representative capacity, such person should so indicate when
signing, and proper evidence satisfactory to the Company of the authority of
such persons to act must be submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Company will pay all stock transfer taxes, if any, payable on account of the
acquisition of Shares by the Company pursuant to the Offer. If, however, payment
of the purchase price is to be made to, or Shares not tendered or not purchased
are to be registered in the name of, any person other than the registered owner,
or if tendered Shares are registered in the name of any person other than the
person signing this Letter of Transmittal and Consent, the amount of any stock
transfer taxes (whether imposed on the registered owner, such other person or
otherwise) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted. See "Terms of the Offer--Acceptance
of Shares for Payment and Payment of Purchase Price" in the Offer to Purchase
and Consent Statement. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE
NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES
TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the
purchase price of any Shares purchased is to be issued in the name of, any
Shares not tendered or not purchased are to be returned to or the check for the
Special Cash Payment is to be issued in the name of, a person other than the
person(s) signing this Letter of Transmittal and Consent or if the check and/or
any certificate for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal and Consent
or to an address other than that shown in the box above under the heading
"Name(s) and Address(es) of Registered Holder(s)," then the "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal and Consent must be completed. Preferred Shareholders tendering
Shares by book-entry transfer will have any Shares not accepted for payment
returned by crediting the account maintained by such Preferred Shareholders at
the Book-Entry Transfer Facility.
8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder and
a Preferred Shareholder granting consent to the Proposal (but not tendering) are
required to provide the Depositary with (i) in the case of a United States
Preferred Shareholder, a correct Taxpayer Identification Number ("Taxpayer
Identification Number" or "TIN") and a certification that the Internal Revenue
Service has not notified such shareholder that he or she is subject to backup
withholding on the Substitute Form W-9 contained herein, or (ii) in the case of
a foreign Preferred Shareholder, a properly completed Form W-8, as hereinafter
discussed under "Important Tax Information." Failure to provide the information
on either Substitute Form W-9 or Form W-8 may subject the holder to a $50
penalty imposed by the Internal Revenue Service and to 31% federal income tax
backup withholding on the gross amount payable. The box in Part 2 of Substitute
Form W-9 may be checked if the holder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future. If the box in
Part 2 is checked and the Depositary is not provided with a TIN by the time of
payment, the Depositary will withhold 31% of the gross amount otherwise payable
thereafter until a TIN is provided to the Depositary.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance or additional copies of the Offer and consent materials should be
directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and addresses listed on the back cover of the Offer to
Purchase and Consent Statement. Preferred Shareholders may also contact their
local broker, dealer, commercial bank or trust company for assistance concerning
the Offer.
10. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including the time of receipt) and acceptance for payment
of any tender of Shares and the form and validity (including time of receipt) of
consents and the eligibility for the Special Cash Payment will be determined by
the Company in its sole discretion, and its determination will be final and
binding. The Company reserves the absolute right to reject any and all tenders
and/or consents that it determines are
12
<PAGE>
not in proper form or the acceptance of or payment for which may, in the opinion
of the Company, be unlawful. The Company also reserves the absolute right to
waive any defect or irregularity in any tender of Shares. None of the Company,
the Dealer Manager, the Depositary, the Information Agent nor any other person
will be under any duty to give notice of any defect or irregularity in tenders,
nor shall any of them incur any liability for failure to give any such notice.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any of your certificate(s)
for Shares have been lost, stolen or destroyed, please call the Depositary at
(800) 777-3674 (toll free). You may need to complete an Affidavit of Loss with
respect to the lost certificate(s) (which will be provided by the Depositary)
and payment of an indemnity bond premium fee may be required. The tender of
Shares pursuant to this Letter of Transmittal and Consent will not be valid
unless prior to the Expiration Date: (a) such procedures have been completed and
a replacement certificate for the Shares has been delivered to the Depositary or
(b) a Notice of Guaranteed Delivery and Consent has been delivered to the
Depositary. See Instruction 2.
13
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a Preferred Shareholder whose tendered Shares
are accepted for payment or who will receive a Special Cash Payment as a result
of granting consent to the Proposal is required to provide the Depositary (as
payer) with either such Preferred Shareholder's correct TIN on Substitute Form
W-9 below or a properly completed Internal Revenue Service Form W-8 (a "Form
W-8"). If such Preferred Shareholder is an individual, the TIN is his or her
social security number. For businesses and other entities, the number is the
federal employer identification number. If the Depositary is not provided with
the correct TIN or properly completed Form W-8, the Preferred Shareholder may be
subject to a $50 penalty imposed by the Internal Revenue Code. In addition,
payments that are made to such Preferred Shareholder with respect to Shares
purchased pursuant to the Offer may be subject to 31% backup withholding.
Certain Preferred Shareholders (including, among others, all corporations
and certain foreign individuals) are exempt from backup withholding. For a
corporate United States Preferred Shareholder to qualify for such exemption,
such Preferred Shareholder must provide the Depositary with a properly completed
and executed Substitute Form W-9 attesting to its exempt status. In order for a
foreign Preferred Shareholder to qualify as an exempt recipient, such Preferred
Shareholder must submit to the Depositary a properly completed Form W-8, signed
under penalties of perjury, attesting to that Preferred Shareholder's exempt
status. A Form W-8 can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If federal income tax backup withholding applies, the Depositary is required
to withhold 31% of any payments made to the Preferred Shareholder. Backup
withholding is not an additional tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of the
tax withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on a Special Cash Payment(s) or payments made to
a Preferred Shareholder with respect to Shares purchased pursuant to the Offer,
the Preferred Shareholder is required to notify the Depositary of his or her
correct TIN by completing the Substitute Form W-9 attached hereto certifying
that the TIN provided on Substitute Form W-9 is correct and that (a) the
Preferred Shareholder has not been notified by the Internal Revenue Service that
he or she is subject to federal income tax backup withholding as a result of
failure to report all interest or dividends or (b) the Internal Revenue Service
has notified the Preferred Shareholder that he or she is no longer subject to
federal income tax backup withholding. Foreign Preferred Shareholders must
submit a properly completed form W-8 in order to avoid the applicable backup
withholding; provided, however, that backup withholding will not apply to
foreign Preferred Shareholders subject to withholding under other provisions of
the Code or the Special Cash Payment or on gross payments received pursuant to
the Offer. Foreign Preferred Shareholders that submit a properly completed Form
W-8 may nevertheless be subject to withholding under other provisions of the
Code on the payments received by them.
14
<PAGE>
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN IN Social Security
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Number OR Employer
DEPARTMENT OF THE TREASURY SIGNING AND DATING BELOW. Identification TIN
INTERNAL REVENUE SERVICE
----------------------------------------------------------
Name (Please Print)
Part 2--
Address Awaiting TIN / /
City State
Zip Code
----------------------------------------------------------
Part 3--CERTIFICATION--UNDER PENALTIES OF PERJURY, I
CERTIFY THAT: (1) the number shown on this form is my
correct taxpayer identification number (or a TIN has not
been issued to me but I have mailed or delivered an
application to receive a TIN or intend to do so in the
near future), (2) I am not subject to backup withholding
PAYER'S REQUEST FOR either because I have not been notified by the Internal
TAXPAYER IDENTIFICATION
NUMBER AND Revenue Service that I am subject to backup withholding as
CERTIFICATION a result of a failure to report all interest or dividends
or the Internal Revenue Service has notified me that I am
no longer subject to backup withholding and (3) all other
information provided on this form is true, correct and
complete.
SIGNATURE DATE , 1999
You must cross out item (2) above if you have been
notified by the Internal Revenue Service that you are
currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
----------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT
IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU
PURSUANT TO THE OFFER OR CONSENT SOLICITATION. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAX-
PAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CER-
TIFICATE IF YOU CHECKED THE BOX IN PART 2 OF SUBSTITUTE
FORM W-9.
- -----------------------------------------------------------------------------------------
</TABLE>
CERTIFICATE OF AWAITING TAXPAYER
IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to do so in the near future. I understand that if I do not provide a
taxpayer identification number by the time of payment, 31% of all payments made
to me will be withheld until I provide a number.
SIGNATURE __________________________________________ DATE ____________ , 1999
15
<PAGE>
NOTICE OF GUARANTEED DELIVERY AND CONSENT
FOR
NEW YORK STATE ELECTRIC & GAS CORPORATION
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES
OF THE FOLLOWING SERIES OF ITS SERIAL PREFERRED STOCK,
PAR VALUE $100 PER SHARE (THE "SHARES")
AT THE FOLLOWING PURCHASE PRICES
<TABLE>
<CAPTION>
SERIES CUSIP NO. PURCHASE PRICE
- --------- ------------- -----------------
<S> <C> <C> <C>
3.75% Cumulative Preferred Stock 649840-20-4 $
4 1/2% Cumulative Preferred Stock (Series 1949) 649840-70-9 $
4.40% Cumulative Preferred Stock 649840-40-2 $
4.15% Cumulative Preferred Stock (Series 1954) 649840-50-1 $
4.15% Cumulative Preferred Stock 649840-2-* $
</TABLE>
------------------------
NEW YORK STATE ELECTRIC & GAS CORPORATION
CONSENT STATEMENT WITH RESPECT TO THE ABOVE-LISTED SERIES OF ITS
SERIAL PREFERRED STOCK
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as hereinafter defined) if certificates for Shares of a series
of serial preferred stock listed above (a "Series of Preferred"), of New York
State Electric & Gas Corporation (the "Company"), to be tendered pursuant to the
Offer are not immediately available, if the procedure for book-entry transfer
cannot be completed on a timely basis, or if time will not permit all other
documents required by the Letter of Transmittal and Consent to be delivered to
the Depositary (listed below) on or prior to the Expiration Date (as defined in
the Offer to Purchase and Consent Statement dated
, 1999). Such form may be delivered by hand or
mailed to the Depositary and must include an endorsement by an Eligible
Institution (as defined in the Offer to Purchase and Consent Statement) in the
form set forth below. See "Terms of the Offer--Procedure for Tendering Shares"
in the Offer to Purchase and Consent Statement.
A SEPARATE NOTICE OF GUARANTEED DELIVERY AND CONSENT MUST BE USED FOR EACH
SERIES OF PREFERRED.
THE ELIGIBLE INSTITUTION WHICH COMPLETES THIS FORM MUST DELIVER THE LETTER
OF TRANSMITTAL AND CONSENT AND CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN
THE TIME SHOWN HEREIN. FAILURE TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH
ELIGIBLE INSTITUTION.
TO: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., DEPOSITARY
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT DELIVERY:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Road-Mail
South Hackensack, NJ 07606 New York, NY 10271 Drop-Reorg
Attn: Reorganization Attn: Reorganization Ridgefield Park, NJ 07660
Department Department Attn: Reorganization
Department
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal and Consent is required to be guaranteed by an Eligible
Institution under the instructions thereto, such signature guarantee must appear
in the applicable space provided in the signature box on such Letter of
Transmittal and Consent.
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Offer to Purchase and Consent Statement, dated
, 1999, and the related Letter of Transmittal
and Consent (which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares listed below, pursuant to the guaranteed
delivery procedure set forth in "Terms of the Offer--Procedure for Tendering
Shares" in the Offer to Purchase and Consent Statement.
Preferred Shareholders who wish to tender their Shares pursuant to the Offer
must submit a duly completed, valid and unrevoked consent to the Proposal.
However, it is not necessary to tender Shares in order to consent to the
Proposal. Included in this Notice of Guaranteed Delivery is a form for granting
such consent.
In order to validly tender Shares pursuant to the Offer, Preferred
Shareholders who become holders of record of Shares after
, 1999 (the "Record Date") and who wish to
tender such Shares must obtain and submit with their tender an irrevocable proxy
from the holder of record of such Shares as of the Record Date in order to grant
their consent to the Proposal. Included in the materials you received is a form
that may be used to obtain such irrevocable proxy.
If, but only if, a Preferred Shareholder consents to the Proposal with
respect to Shares but does not tender those Shares and the Proposal is approved,
the Company will make a special cash payment to such Preferred Shareholder in an
amount equal to $ for each such Share (the "Special Cash Payment").
Those Preferred Shareholders who validly tender their Shares will be entitled
only to the purchase price per Share listed above and will not be entitled to
the Special Cash Payment.
NOTE: THE FOLLOWING ACTIONS WILL HAVE THE SAME EFFECT AS WITHHOLDING CONSENT
TO THE PROPOSAL: (A) FAILING TO EXECUTE, DATE AND RETURN A CONSENT FORM OR (B)
EXECUTING, DATING AND RETURNING A CONSENT MARKED "WITHHOLD CONSENT" OR "ABSTAIN"
AS TO THE PROPOSAL. IF RETURNED CONSENT FORMS ARE EXECUTED AND DATED BUT NOT
MARKED WITH RESPECT TO THE PROPOSAL, THE SHAREHOLDER WILL BE DEEMED TO HAVE
CONSENTED TO THE PROPOSAL.
2
<PAGE>
CONSENT FORM
The undersigned, the holder of record as of the Record Date of the Shares
indicated below (or persons obtaining an irrevocable proxy from such holder),
hereby acknowledges receipt of the Offer to Purchase and Consent Statement dated
, 1999 and related Letter of Transmittal and
Consent and consents without a meeting, pursuant to the Company's Restated
Certificate of Incorporation, as amended, with respect to all of such Shares, to
the adoption of the following Proposal.
THE BOARD OF DIRECTORS URGES YOU TO CONSENT TO THE PROPOSAL.
THE PROPOSAL: Consent to the issuance by the Company of up to $ of
unsecured indebtedness in excess of the Present Limitation as set forth in the
Offer to Purchase and Consent Statement dated , 1999.
/ / CONSENT / / WITHHOLD CONSENT / / ABSTAIN
INDICATE YOUR VOTE BY AN (X).
IF RETURNED CONSENT FORMS ARE EXECUTED AND DATED BUT NOT MARKED WITH RESPECT
TO THE PROPOSAL, THE SHAREHOLDER WILL BE DEEMED TO HAVE CONSENTED TO THE
PROPOSAL.
SERIES OF PREFERRED (CHECK ONE):
SERIAL PREFERRED STOCK ($100 PAR VALUE)
[ ] 3.75% Cumulative Preferred Stock
[ ] 4 1/2% Cumulative Preferred Stock (Series 1949)
[ ] 4.40% Cumulative Preferred Stock
[ ] 4.15% Cumulative Preferred Stock (Series 1954)
[ ] 4.15% Cumulative Preferred Stock
A separate Notice of Guaranteed Delivery and Consent must be used for each
Series of Preferred.
Number of Shares:
Certificate Nos. (if available):
Any holder of Shares held of record as of the Record Date in the name of
another holder must establish to the satisfaction of the Company his or her
entitlement to exercise or transfer this consent. This will ordinarily require
an irrevocable proxy by such record holder to and from each successive
transferee, including the holder, with each signature guaranteed by an Eligible
Institution. A form of irrevocable proxy has been provided herewith.
3
<PAGE>
SIGNATURE(S)
X ______________________________________________________________________________
X ______________________________________________________________________________
Dated: __________________________________________________________________, 1999.
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
(Must be signed by holder(s) exactly as name(s) appear(s) as of the Record Date
on certificate(s) for the Shares or on a security position listing or by
person(s) authorized to become holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation, agent or other person
acting in a fiduciary or representative capacity, please provide the following
information and see Instruction 5 of the Letter of Transmittal and Consent.)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
DAYTIME Area Code and Telephone No.: ___________________________________________
<TABLE>
<S> <C>
If Shares will be tendered by Name of Record Holder(s):
book-entry transfer, Name of
Tendering Institution:
(PLEASE PRINT OR TYPE)
Account No.: Address:
at The Depository Trust Company
ZIP CODE
Signature(s) of Holder(s) Area Code
Dated: , 1999. and Telephone No.:
</TABLE>
4
<PAGE>
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc. ("NASD") or a
commercial bank or trust company having an office or correspondent in the United
States, guarantees to deliver to the Depositary at one of its addresses set
forth above certificate(s) for the shares tendered hereby, in proper form for
transfer, or a confirmation of the book-entry transfer of the Shares tendered
hereby into the Depositary's account at The Depository Trust Company, in each
case together with properly completed and duly executed Letter(s) of Transmittal
and Consent (or facsimile(s) thereof), with any required signature guarantee(s)
and any other required documents, all within three business days after the date
hereof.
<TABLE>
<S> <C>
------------------------------------------- -------------------------------------------
Name of Firm Authorized Signature
------------------------------------------- -------------------------------------------
Address Name
------------------------------------------- -------------------------------------------
City, State, Zip Code Title
-------------------------------------------
Area Code and Telephone Number
Date:, 1999
</TABLE>
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES
MUST BE SENT WITH THE APPLICABLE LETTER OF TRANSMITTAL AND CONSENT.
5
<PAGE>
PREFERRED SHAREHOLDERS WHO ARE NOT HOLDERS OF RECORD AS OF THE RECORD DATE MUST
OBTAIN AN IRREVOCABLE PROXY FROM THE HOLDER OF RECORD AS OF THE RECORD DATE IN
ORDER TO VALIDLY GRANT A CONSENT. PROVIDED BELOW IS A FORM OF IRREVOCABLE PROXY
THAT MAY BE USED FOR THAT PURPOSE.
------------------------
PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK
CONSENT TO A SUBSEQUENT HOLDER OF PREFERRED STOCK WHO WAS
NOT A HOLDER OF RECORD ON , 1999
IRREVOCABLE PROXY
WITH RESPECT TO SHARES OF THE
SERIAL PREFERRED STOCK, PAR VALUE $100 PER SHARE
OF
NEW YORK STATE ELECTRIC & GAS CORPORATION
THE UNDERSIGNED HEREBY IRREVOCABLY APPOINTS
---------------------------------------
TYPE OR PRINT NAME OF TRANSFEREE
as attorney and proxy, with full power of substitution, to grant consent to the
Proposal with respect to the Shares indicated below which were held of record by
the undersigned as of , 1999.
This proxy shall be effective whether or not the Shares indicated below are
tendered in the Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the Shares indicated
below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH
AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest and assigns of the undersigned.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in the Offer to Purchase and Consent Statement and in the
Letter of Transmittal and Consent will constitute a binding agreement between
the undersigned and the Company upon the terms and subject to the conditions of
the Offer.
- --------------------------------------------------------------------------------
DESCRIPTION OF PREFERRED STOCK
- --------------------------------------------------------------------------------
SERIES OF PREFERRED (CHECK ONE):
SERIAL PREFERRED STOCK ($100 PAR VALUE)
[ ] 3.75% Cumulative Preferred Stock
[ ] 4 1/2% Cumulative Preferred Stock (Series 1949)
[ ] 4.40% Cumulative Preferred Stock
[ ] 4.15% Cumulative Preferred Stock (Series 1954)
[ ] 4.15% Cumulative Preferred Stock
<PAGE>
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S) AGGREGATE NUMBER OF SHARES
<S> <C>
Total:
SIGNATURE OF RECORD HOLDER OR SIGNATURE OF RECORD HOLDER OR
AUTHORIZED SIGNATORY AUTHORIZED SIGNATORY
TYPE OR PRINT NAME TYPE OR PRINT NAME
Date: , 1999 Date: , 1999
</TABLE>
Tax Identification or Social Security No(s).: __________________________________
(Must be signed by holder(s) exactly as name(s) appear(s) as of the Record
Date on certificate(s) for the Shares or on a security position listing or by
person(s) authorized to become holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation, agent or other person
acting in a fiduciary or representative capacity, please provide the following
information and see Instruction 5 of the Letter of Transmittal and Consent.)
Name: __________________________________________________________________________
(PLEASE PRINT)
Capacity: ______________________________________________________________________
(FULL TITLE)
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Tel. No.: ________________________________________________________
PLEASE COMPLETE IF APPLICABLE:
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND
5 OF THE LETTER OF TRANSMITTAL AND CONSENT)
Name of Firm: __________________________________________________________________
Authorized Signature: __________________________________________________________
Title: _________________________________________________________________________
Dated: ___________________________________________________________________, 1999
<PAGE>
SALOMON SMITH BARNEY INC.
THE DEALER MANAGER FOR
NEW YORK STATE ELECTRIC & GAS CORPORATION
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING
SERIES OF ITS SERIAL PREFERRED STOCK, PAR VALUE $100 PER SHARE,
AT THE FOLLOWING PURCHASE PRICES
<TABLE>
<CAPTION>
SERIES CUSIP NO. PURCHASE PRICE
- --------- ------------- -----------------
<C> <S> <C> <C>
3.75% Cumulative Preferred Stock 649840-20-4 $
4 1/2% Cumulative Preferred Stock (Series 1949) 649840-70-9 $
4.40% Cumulative Preferred Stock 649840-40-2 $
4.15% Cumulative Preferred Stock (Series 1954) 649840-50-1 $
4.15% Cumulative Preferred Stock 649840-2-* $
</TABLE>
------------------------
NEW YORK STATE ELECTRIC & GAS CORPORATION
CONSENT STATEMENT WITH RESPECT TO THE ABOVE-LISTED
SERIES OF ITS SERIAL PREFERRED STOCK
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED
(THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
In our capacity as Dealer Manager, we are enclosing the materials listed
below relating to the invitation of New York State Electric & Gas Corporation
(the "Company"), a New York corporation, to the holders of each series of serial
preferred stock of the Company listed above (each a "Series of Preferred," and
the holder thereof, a "Preferred Shareholder") to tender any and all of their
shares (the "Shares") for purchase at the purchase price per Share listed above,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase and Consent Statement, dated , 1999
and in the applicable Letter of Transmittal and Consent (which together
constitute the "Offer"). The Company will purchase any and all Shares validly
tendered and not withdrawn, upon the terms and subject to the conditions set
forth in the Offer. In conjunction with the Offer, the Company is soliciting
consents from holders of each Series of Preferred with respect to a proposal to
permit the issuance by the Company of additional unsecured indebtedness in
excess of all other unsecured indebtedness presently authorized, permitted or
previously consented to, as described in the Offer (the "Proposal").
If, but only if, a Preferred Shareholder consents to the Proposal with
respect to Shares but does not tender those Shares and the Proposal is approved,
the Company will make a special cash payment to such Preferred Shareholder in an
amount equal to $ for each such Share (the "Special Cash Payment"). Those
Preferred Shareholders who validly tender their Shares will be entitled only to
the purchase price per Share listed above and will not be entitled to the
Special Cash Payment.
The Offer is conditioned upon, among other things, the approval of the
Proposal by holders of at least a majority of the votes of shares of the
Company's outstanding serial preferred stock entitled to be cast (which includes
each Series of Preferred and the Company's 6.30% Serial Preferred Stock
(Cumulative, $100 Par Value) which is not subject to the Offer), considered
together as one class. The Offer for any one Series of Preferred is not
conditioned upon any minimum number of Shares of such Series of Preferred being
tendered and is independent of the Offer for any other Series of Preferred.
PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER
MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED CONSENT TO THE PROPOSAL, WHICH
IS CONTAINED IN THE APPLICABLE LETTER OF TRANSMITTAL AND CONSENT. HOWEVER, IT IS
NOT NECESSARY TO TENDER SHARES IN ORDER TO CONSENT TO THE PROPOSAL.
<PAGE>
In order to validly tender Shares pursuant to the Offer, Preferred
Shareholders who become holders of record of Shares after , 1999
(the "Record Date") and who wish to tender such Shares must obtain and submit
with their tender an irrevocable proxy from the holder of record of such Shares
as of the Record Date in order to grant their consent to the Proposal. In order
to facilitate receipt of consents, the Shares of each Series of Preferred will
trade "with proxy" in the over-the-counter market and on the New York Stock
Exchange, as applicable.
The New York Stock Exchange (the "NYSE"), the National Association of
Securities Dealers, Inc. (the "NASD") and The Depository Trust Company (the
"DTC") have issued notices informing their members and participants that the
Shares will trade "with proxy" and that settlement of all trades after the
Record Date should include an irrevocable proxy from the holder of record of
such Shares as of the Record Date.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or for whom you hold
Shares registered in their own names. Please bring the Offer to their attention
as promptly as possible.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase and Consent Statement, dated ,
1999.
2. A separate Letter of Transmittal and Consent for each Series of
Preferred.
3. A letter to Preferred Shareholders from the Company.
4. A Notice of Guaranteed Delivery and Consent.
5. A form of letter which may be sent to your clients for obtaining such
clients' instructions with regard to the Offer and the consent solicitation.
6. A form of irrevocable proxy that may be used to obtain the proxy of
holders of record of Shares as of the Record Date.
7. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9, providing information relating to backup federal income
tax withholding.
8. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., the Depositary.
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND CONSENT, AND
ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND CONSENT FOR A PARTICULAR SERIES
MAY BE USED FOR SUCH SERIES OF PREFERRED.
SOLICITATION FEES AND EXPENSES
The Company will pay a solicitation fee of an amount equal to $1.50 per
Share for Shares that are tendered, accepted for payment and paid for pursuant
to the Offer (except that for transactions for beneficial owners whose ownership
equals or exceeds 2,500 Shares, the Company will pay a solicitation fee equal to
$1.00 per Share). If the Proposal is approved, the Company will pay a
solicitation fee to Soliciting Dealers of $.50 per Share for Shares that are not
tendered pursuant to the Offer but in respect of which a consent to the Proposal
is granted. With respect to fees payable pursuant to this paragraph involving
transactions for beneficial owners whose ownership is less than 2,500 Shares,
any fees payable hereunder shall be paid in full to the Dealer Manager unless a
Soliciting Dealer is designated (as herein described), in which case such fee
shall be payable in full to such designated Soliciting Dealer (which designated
Soliciting Dealer may be the Dealer Manager). With respect to fees payable
pursuant to this paragraph involving transactions for beneficial owners whose
ownership equals or exceeds 2,500 Shares, any fees payable hereunder shall be
paid in full to the Dealer Manager unless a Soliciting Dealer is designated, in
2
<PAGE>
which case 80% of such fee shall be paid to the Dealer Manager and 20% of such
fee shall be paid to the designated Soliciting Dealer (which designated
Soliciting Dealer may be the Dealer Manager).
A designated Soliciting Dealer shall be named under the heading "Solicited
Tenders and/or Consents" in the applicable Letter of Transmittal and Consent and
shall have solicited and obtained the tender and/or consent, and shall also be
(a) any broker or dealer in securities, including the Dealer Manager in its
capacity as a dealer or broker, which is a member of any national securities
exchange or of the NASD, (b) any foreign broker or dealer not eligible for
membership in the NASD which agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member, or (c) any bank or trust company (each of which
is referred to herein as a "Soliciting Dealer").
No such solicitation fee shall be payable to a Soliciting Dealer with
respect to the tender and/or consent of Shares by a holder unless the applicable
Letter of Transmittal and Consent accompanying such tender and/or consent
designates such Soliciting Dealer. No such fee shall be paid to a Soliciting
Dealer with respect to Shares tendered or Shares for which a consent has been
granted for such Soliciting Dealer's own account. If tendered Shares or Shares
for which a consent has been granted are registered in the name of such
Soliciting Dealer, no such fee shall be payable unless such Shares are held by
such Soliciting Dealer as nominee and such Shares are being tendered and/or a
consent is being granted for the benefit of one or more beneficial owners
identified on the applicable Letter of Transmittal and Consent and such
beneficial owner has designated such Soliciting Dealer. Beneficial owners should
complete the "Solicited Tenders and/or Consents" box in the accompanying Letter
of Transmittal and Consent to designate a Soliciting Dealer. No such fee shall
be payable to a Soliciting Dealer if such Soliciting Dealer is required for any
reason to transfer the amount of such fee to a beneficial owner. No broker,
dealer, bank, trust company or fiduciary shall be deemed to be the agent of the
Company, the Depositary, the Information Agent or the Dealer Manager for
purposes of the Offer and Consent Solicitation.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b) and (c) above even when the activities of such organizations in
connection with the Offer and Consent Solicitation consist solely of forwarding
to clients materials relating to the Offer and Consent Solicitation, including
the applicable Letter of Transmittal and Consent, and tendering Shares or
granting consents as directed by beneficial owners thereof. No Soliciting Dealer
is required to make any recommendation to holders of Shares as to whether to
tender or refrain from tendering in the Offer or whether to grant or refrain
from granting a consent. No assumption is made, in making payment to any
Soliciting Dealer, that its activities in connection with the Offer included any
activities other than those described above, and for all purposes noted in all
materials relating to the Offer, the term "solicit" shall be deemed to mean no
more than "processing shares tendered or consents" or "forwarding to customers
materials regarding the Offer and Consent Solicitation."
By accepting any solicitation fee, a person shall be deemed to have
represented that: (i) it has complied with the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (ii) it is
entitled to such compensation for such solicitation under the terms and
conditions of the Offer; (iii) in soliciting tenders and/or consent, it has used
no soliciting materials other than those furnished by the Company; and (iv) if
it is a foreign broker or dealer not eligible for membership in the NASD, it has
agreed to conform to the NASD's Rules of Fair Practice in making solicitations.
The Company will, upon request, reimburse you for reasonable and customary
handling and mailing expenses incurred by them in forwarding materials relating
to the Offer to their customers. The Company will pay all stock transfer taxes
applicable to its purchase of Shares pursuant to the Offer, subject to
Instruction 6 of the applicable Letter of Transmittal and Consent.
3
<PAGE>
IN ORDER FOR A SOLICITING DEALER TO RECEIVE A SOLICITATION FEE, SUCH
SOLICITING DEALER MUST BE DESIGNATED AS SUCH ON THE APPLICABLE LETTER OF
TRANSMITTAL AND CONSENT.
All questions as to the validity, form and eligibility (including time of
receipt) of any designation of a Soliciting Dealer will be determined by the
Company, in its sole discretion, which determination will be final and binding.
Neither the Company nor any other person will be under any duty to give
notification of any defects or irregularities in any designation of a Soliciting
Dealer or incur any liability for failure to give such notification.
THE SAME LETTER OF TRANSMITTAL AND CONSENT MAY NOT BE USED TO TENDER SHARES
AND TO GRANT CONSENT WITH RESPECT TO SHARES WHICH ARE NOT BEING TENDERED. A
PREFERRED SHAREHOLDER TENDERING A PORTION OF HIS OR HER SHARES AND GRANTING A
CONSENT WITH RESPECT TO OTHER SHARES WITHOUT TENDERING SUCH SHARES MUST SUBMIT
TWO SEPARATE LETTERS OF TRANSMITTAL AND CONSENT, ONE WITH RESPECT TO THE
TENDERED SHARES AND ONE WITH RESPECT TO THE SHARES FOR WHICH A CONSENT IS
GRANTED BUT WHICH ARE NOT TENDERED.
A LETTER OF TRANSMITTAL AND CONSENT MAY RELATE ONLY TO ONE DELIVERY BY BOOK
ENTRY TRANSFER, AND THUS ONLY ONE VOI NUMBER MAY BE SUPPLIED ON A LETTER OF
TRANSMITTAL AND CONSENT. SEPARATE LETTERS OF TRANSMITTAL AND CONSENT MUST BE
USED FOR EACH DELIVERY BY BOOK ENTRY TRANSFER.
Very truly yours,
Salomon Smith Barney Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION
AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
4
<PAGE>
NEW YORK STATE ELECTRIC & GAS CORPORATION
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING
SERIES OF ITS SERIAL PREFERRED STOCK, PAR VALUE $100 PER SHARE,
AT THE FOLLOWING PURCHASE PRICES
<TABLE>
<CAPTION>
SERIES CUSIP NO. PURCHASE PRICE
- --------- ------------- -----------------
<C> <S> <C> <C>
3.75% Cumulative Preferred Stock 649840-20-4 $
4 1/2% Cumulative Preferred Stock (Series 1949) 649840-70-9 $
4.40% Cumulative Preferred Stock 649840-40-2 $
4.15% Cumulative Preferred Stock (Series 1954) 649840-50-1 $
4.15% Cumulative Preferred Stock 649840-2-* $
</TABLE>
------------------------
NEW YORK STATE ELECTRIC & GAS CORPORATION
CONSENT STATEMENT WITH RESPECT TO THE ABOVE-LISTED
SERIES OF ITS SERIAL PREFERRED STOCK
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED.
(THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase and Consent
Statement, dated , 1999, and a separate Letter of Transmittal and
Consent for each series of serial preferred stock listed above (each a "Series
of Preferred," and the holder thereof, a "Preferred Shareholder") of New York
State Electric & Gas Corporation (the "Company"), a New York corporation, of
which you own shares. The Company invites the holders of shares (the "Shares")
of the Series of Preferred listed above to tender any and all of their Shares
for purchase at the purchase price per Share listed above, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase and Consent Statement and in the applicable Letter of Transmittal and
Consent (which together constitute the "Offer"). The Company will purchase any
and all Shares validly tendered and not withdrawn, upon the terms and subject to
the conditions set forth in the Offer. In conjunction with the Offer, the
Company is soliciting consents from holders of each Series of Preferred with
respect to a proposal to permit the issuance by the Company of additional
unsecured indebtedness in excess of all other unsecured indebtedness presently
authorized, permitted or previously consented to, as described in the Offer (the
"Proposal").
If, but only if, a Preferred Shareholder consents to the Proposal with
respect to Shares but does not tender those Shares and the Proposal is approved,
the Company will make a special cash payment to such Preferred Shareholder in an
amount equal to $ for each such Share (the "Special Cash Payment"). Those
Preferred Shareholders who validly tender their Shares will be entitled only to
the purchase price per Share listed above and will not be entitled to the
Special Cash Payment.
The Offer is conditioned upon, among other things, the approval of the
Proposal by holders of at least a majority of the votes of shares of the
Company's outstanding serial preferred stock entitled to be cast (which includes
each Series of Preferred and the Company's 6.30% Serial Preferred Stock
(Cumulative, $100 Par Value) which is not subject to the Offer), considered
together as one class. The Offer for any one Series of Preferred is not
conditioned upon any minimum number of Shares of such Series of Preferred being
tendered and is independent of the Offer for any other Series of Preferred.
PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER
MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED CONSENT TO THE PROPOSAL, WHICH
IS CONTAINED IN THE APPLICABLE LETTER OF TRANSMITTAL AND CONSENT. HOWEVER, IT IS
NOT NECESSARY TO TENDER SHARES IN ORDER TO CONSENT TO THE PROPOSAL.
In order to validly tender Shares pursuant to the Offer, Preferred
Shareholders who become holders of record of Shares after , 1999 (the
"Record Date") and who wish to tender such Shares
<PAGE>
must obtain and submit with their tender an irrevocable proxy from the holder of
record of such Shares as of the Record Date in order to grant their consent to
the Proposal. In order to facilitate receipt of consents, the Shares of each
Series of Preferred will trade "with proxy" in the over-the-counter market and
on the New York Stock Exchange, as applicable.
The New York Stock Exchange (the "NYSE"), the National Association of
Securities Dealers, Inc. (the "NASD") and The Depository Trust Company (the
"DTC") have issued notices informing their members and participants that the
Shares will trade "with proxy" and that settlement of all trades after the
Record Date should include an irrevocable proxy from the holder of record of
such Shares as of the Record Date.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT BUT NOT
REGISTERED IN YOUR NAME. A TENDER OF SUCH SHARES OR CONSENT WITH RESPECT TO SUCH
SHARES TO THE PROPOSAL CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. ANY LETTER OF TRANSMITTAL AND CONSENT FURNISHED
TO YOU IS SOLELY FOR YOUR INFORMATION AND CANNOT BE USED BY YOU TO TENDER OR
GRANT CONSENT WITH RESPECT TO SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender and/or grant
consent to the Proposal with respect to any or all of the Shares held by us for
your account, upon the terms and subject to the conditions set forth in the
Offer.
PLEASE READ THE FOLLOWING INFORMATION CAREFULLY:
(1) The Offer is for any and all Shares outstanding as of ,
1999. The Offer is conditioned upon, among other things, approval of the
Proposal. The Offer for any one Series of Preferred is not conditioned upon a
minimum number of Shares of such Series of Preferred being tendered and is
independent of the Offer for any other Series of Preferred.
(2) The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on , 1999 unless the Offer is extended with respect to a
Series of Preferred. Your instructions should be forwarded to us in ample time
to permit us to submit a tender and/or consent on your behalf by the Expiration
Date. If you would like to withdraw your Shares that we have tendered or
withdraw a consent that was given, you can withdraw them so long as the Offer
remains open, or at any time after the expiration of forty business days from
the commencement of the Offer, and if such tendered Shares have not been
accepted for payment and with respect to consents, until the Proposal has become
effective.
(3) Preferred Shareholders who wish to tender their Shares pursuant to the
Offer must submit a duly completed, valid and unrevoked consent to the Proposal.
However, while you must grant a consent to tender Shares, it is not necessary to
tender Shares in order to consent to the Proposal.
(4) Preferred Shareholders who are the holders of record as of the Record
Date with respect to such Shares and Preferred Shareholders who have obtained an
irrevocable proxy from such holders have the right to grant their consent to the
Proposal regardless of whether they tender their Shares. If, but only if, a
Preferred Shareholder consents to the Proposal with respect to Shares but does
not tender those Shares and the Proposal is approved, the Company will make the
Special Cash Payment to such Preferred Shareholder in an amount equal to $
for each such Share.
(5) The Company will pay all stock transfer taxes applicable to its
purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter
of Transmittal and Consent.
NONE OF THE COMPANY, ITS BOARD OF DIRECTORS NOR ANY OF ITS OFFICERS MAKES
ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER SHARES.
EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN
2
<PAGE>
DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
If you wish to have us tender and/or grant a consent with respect to any or
all of your Shares held by us for your account upon the terms and subject to the
conditions set forth in the Offer, please so instruct us by completing,
executing, detaching and returning to us the instruction form on the detachable
part hereof. An envelope to return your instructions to us is enclosed. If you
authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified on the detachable part hereof. If you authorize consent to
the Proposal with respect to your Shares, consent to the Proposal will be
granted with respect to all such Shares unless otherwise specified. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender and/or grant a consent to the Proposal on your behalf by the Expiration
Date.
The Offer is not being made to, nor will the Company accept tenders from,
owners of Shares in any jurisdiction in which the Offer or its acceptance would
not be in compliance with the laws of such jurisdiction. The Company is not
aware of any jurisdiction where the making of the Offer or the tender of Shares
would not be in compliance with applicable law. If the Company becomes aware of
any jurisdiction where the making of the Offer or if the tender of Shares is not
in compliance with any applicable law, the Company will make a good faith effort
to comply with such law. If, after such good faith effort, the Company cannot
comply with such law, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the owners of Shares residing in such
jurisdiction. In any jurisdiction in which the securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer will
be deemed to be made on the Company's behalf by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
3
<PAGE>
INSTRUCTIONS
WITH RESPECT TO THE OFFER TO PURCHASE BY THE COMPANY FOR CASH
ANY AND ALL OUTSTANDING SHARES OF A SERIES OF PREFERRED
OF, AND CONSENT SOLICITATION BY,
NEW YORK STATE ELECTRIC & GAS CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase and Consent Statement, dated , 1999, and a separate
Letter of Transmittal and Consent for each Series of Preferred of the Company in
which the undersigned owns Shares in connection with the invitation of the
Company to the holders of each Series of Preferred to tender any and all of
their Shares of a Series of Preferred for purchase at the purchase price per
Share listed on the front cover of the Offer to Purchase and Consent Statement,
net to the seller in cash, upon the terms and subject to the conditions of the
Offer, and in connection with the consent solicitation being conducted by the
Board of Directors of the Company.
TENDER
PLEASE NOTE THAT TO TENDER SHARES YOU MUST GRANT A CONSENT WITH RESPECT TO
SUCH SHARES.
This will instruct you to tender to the Company the number of Shares
indicated below (or, if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions of the Offer.
<TABLE>
<CAPTION>
SERIES OF PREFERRED NUMBER OF SHARES TO BE TENDERED*
<S> <C>
</TABLE>
CONSENT
IF YOU TENDER SHARES YOU MUST GRANT A CONSENT WITH RESPECT TO SUCH SHARES.
IF YOU TENDER SHARES YOU NEED NOT LIST SHARES BELOW. ONLY LIST SHARES BELOW IF
YOU ARE NOT TENDERING SUCH SHARES AND ARE ONLY GRANTING A CONSENT WITH RESPECT
TO SUCH SHARES. IN ANY CASE, YOU MUST CHECK THE APPROPRIATE BOX BELOW.
You are instructed to grant consent, withhold consent or abstain with
respect to all Shares as indicated below in respect of the Proposal and with
respect to which Shares the undersigned is entitled to grant consent.
/ / CONSENT / / WITHHOLD CONSENT / / ABSTAIN
INDICATE YOUR VOTE BY AN (X).
<TABLE>
<CAPTION>
NUMBER OF SHARES WITH RESPECT TO
SERIES OF PREFERRED WHICH CONSENT IS GRANTED**
<S> <C>
</TABLE>
SIGNATURE(S)
X ______________________________________________________________________________
X ______________________________________________________________________________
Dated: __________________________________________________________________, 1999.
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
DAYTIME Area Code and Telephone No.: ___________________________________________
Social Security or Taxpayer Identification No.: ________________________________
- ------------------------------
* By executing and returning these Instructions, unless otherwise indicated,
it will be assumed that all Shares held by us for your account are to be
tendered.
** By executing and returning these Instructions, unless otherwise indicated,
it will be assumed that all Shares held by us for your account are to grant
CONSENT to the Proposal.
4
