<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 8, 1998)
9,000,000 PREFERRED SECURITIES
ENTERPRISE CAPITAL TRUST I
7.44% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPRSSM"), SERIES A
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT ENTERPRISE CAPITAL TRUST I
HAS AVAILABLE FUNDS AS SET FORTH HEREIN BY
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
------------------------
The 7.44% Trust Originated Preferred Securities, Series A (the "Series A
Preferred Securities") offered hereby represent undivided beneficial interests
in the assets of Enterprise Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Series A Issuer"). Public Service
Enterprise Group Incorporated ("Enterprise") is the owner of the beneficial
(CONTINUED ON NEXT PAGE)
------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE S-3 FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE SERIES A PREFERRED SECURITIES, INCLUDING THE PERIOD
DURING WHICH AND CIRCUMSTANCES UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE
SERIES A PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX
CONSEQUENCES.
The Series A Preferred Securities have been authorized for listing on the
New York Stock Exchange upon official notice of issuance. Trading of the Series
A Preferred Securities is expected to commence within a 30-day period after the
initial delivery thereof.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[CAPTION]
<TABLE>
<S> <C> <C> <C>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING THE SERIES
OFFERING PRICE COMMISSION(1) A ISSUER(2)(3)
<S> <C> <C> <C>
Per Series A Preferred Security..................... $25.00 (2) $25.00
Total............................................... $225,000,000 (2) $225,000,000
</TABLE>
(1) Enterprise and the Series A Issuer have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the Series A Preferred
Securities will be used to purchase the Series A Debentures, under the
Underwriting Agreement, Enterprise will pay to the Underwriters $.7875 per
Series A Preferred Security (or $7,087,500 in the aggregate). See
"Underwriting."
(3) Expenses of the offering, which are payable by Enterprise, are estimated to
be $450,000.
------------------------
The Series A Preferred Securities offered hereby are offered severally by
the Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Series A Preferred Securities will be made in
book-entry-only form through the facilities of DTC in New York, New York on or
about January 20, 1998 against payment therefor in immediately available funds.
------------------------
MERRILL LYNCH & CO. GOLDMAN, SACHS & CO.
A.G. EDWARDS & SONS, INC.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
------------------------
The date of this Prospectus Supplement is January 14, 1998.
SM"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
interests represented by the common securities of the Series A Issuer (the
"Common Securities"). First Union National Bank is the Property Trustee of the
Series A Issuer (the "Property Trustee"). The Series A Issuer exists for the
sole purpose of issuing beneficial interests in the assets of the Series A
Issuer and investing the proceeds thereof in 7.44% Deferrable Interest
Subordinated Debentures, Series A to be issued by Enterprise (the "Series A
Debentures"). The Series A Preferred Securities have a preference over the
Common Securities under certain circumstances with respect to cash distributions
and amounts payable on redemption or liquidation. See "Description of the
Preferred Securities -- Subordination of Common Securities" in the accompanying
Prospectus.
Holders of the Series A Preferred Securities are entitled to receive
cumulative cash distributions ("Distributions") at an annual rate of 7.44% of
the liquidation amount of $25 per Series A Preferred Security, accumulating from
the date of original issuance and payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing March 31, 1998. So
long as no Debenture Event of Default has occurred and is continuing, Enterprise
has the right to defer payments of interest on the Series A Debentures by
extending the interest payment period in respect thereof for up to 20
consecutive quarters (each, an "Extension Period"), but not beyond the maturity
or any redemption date of the Series A Debentures. See "Certain Terms of the
Series A Preferred Securities -- Distributions" herein and "Description of the
Debentures -- Option to Extend Interest Payment Period" in the accompanying
Prospectus. If and for so long as interest payments are deferred, Distributions
on the Series A Preferred Securities will also be deferred. During an Extension
Period, Distributions will continue to accumulate and owners of Series A
Preferred Securities will be required to accrue interest income for federal
income tax purposes. See "United States Taxation -- Potential Extension of
Interest Payment Period and Original Issue Discount."
Enterprise has, through the Series A Guarantee, the Trust Agreement, the
Indenture and the Series A Debentures, taken together, fully, irrevocably and
unconditionally guaranteed all of the Series A Issuer's obligations under the
Series A Preferred Securities. Under the Series A Guarantee, Enterprise agrees
to make payments of Distributions and payments on redemption or liquidation with
respect to the Series A Preferred Securities, but only to the extent that the
Series A Issuer holds funds available therefor and has not made such payments.
See "Description of the Guarantee" in the accompanying Prospectus. If Enterprise
fails to make a payment on the Series A Debentures, the Series A Issuer will not
have sufficient funds to make the related payment, including Distributions, on
the Series A Preferred Securities. The Series A Guarantee does not cover any
such payment when the Series A Issuer does not have sufficient funds available
therefor. In such event, the Property Trustee or holders of the Series A
Preferred Securities may enforce the rights of the Series A Issuer under the
Series A Debentures. See "Description of the Guarantee -- Guarantee Events of
Default" in the accompanying Prospectus.
The obligations of Enterprise under the Series A Guarantee are subordinate
and junior in right of payment to all general liabilities of Enterprise and the
obligations of Enterprise under the Series A Debentures are subordinate and
junior in right of payment to all present and future Senior Indebtedness of
Enterprise (as defined in the accompanying Prospectus). At November 30, 1997,
the Senior Indebtedness of Enterprise aggregated approximately $75 million.
The Series A Preferred Securities are subject to mandatory redemption upon
payment of the Series A Debentures at maturity on March 31, 2047, or upon
earlier redemption. See "Certain Terms of the Series A Preferred
Securities -- Redemption." Enterprise has the option at any time on or after
March 31, 2003 to redeem, in whole or in part, the Series A Debentures. In
addition, the Series A Debentures are subject to redemption, in whole but not in
part, at the option of Enterprise upon the occurrence of certain special events
described under "Certain Terms of the Series A Preferred Securities -- Special
Event Redemption."
Enterprise has the right, at any time, subject to certain conditions, to
dissolve the Series A Issuer and, after satisfaction of liabilities to creditors
of the Series A Issuer, cause the Series A Debentures to be distributed to the
holders of the Series A Preferred Securities and the Common Securities. See
"Certain Terms of the Series A Preferred Securities -- Distribution of Series A
Debentures." If the Series A Debentures are so distributed, Enterprise will use
its best efforts to list them on the New York Stock Exchange.
In the event of the dissolution and liquidation of the Series A Issuer,
holders of Series A Preferred Securities will be entitled to receive a
liquidation amount of $25 per Series A Preferred Security plus accumulated and
unpaid Distributions to the date of payment, unless, in connection therewith,
the Series A Debentures are distributed to the holders of the Series A Preferred
Securities and the Common Securities. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution" in the accompanying
Prospectus.
S-2
<PAGE>
The Series A Preferred Securities are represented by global securities
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Series A Preferred Securities will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described in the accompanying Prospectus, Series
A Preferred Securities in certificated form will not be issued in exchange for
the global securities. See "Description of the Preferred Securities --
Book-Entry-Only Issuance -- The Depository Trust Company" in the
accompanying Prospectus.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES A PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF SERIES A
PREFERRED SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
The following information supplements, and should be read in conjunction
with, the information contained in the accompanying Prospectus. Each of the
capitalized terms used in this Prospectus Supplement and not defined herein has
the meaning set forth in the accompanying Prospectus.
RISK FACTORS
Prospective purchasers of Series A Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and in
the accompanying Prospectus and should particularly consider the following
matters:
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE SERIES
A DEBENTURES
The obligations of Public Service Enterprise Group Incorporated
("Enterprise") under the Guarantee (the "Series A Guarantee") issued for the
benefit of the holders of the 7.44% Trust Originated Preferred Securities (the
"Series A Preferred Securities") issued by Enterprise Capital Trust I (the
"Series A Issuer") are unsecured and rank subordinate and junior in right of
payment to all general liabilities of Enterprise. The obligations of Enterprise
under its 7.44% Deferrable Interest Subordinated Debentures, Series A (the
"Series A Debentures") issued pursuant to the Indenture dated as of January 1,
1998 (as amended and supplemented from time to time, the "Indenture") between
Enterprise and First Union National Bank, as trustee (the "Debenture Trustee"),
are unsecured and rank subordinate and junior in right of payment to all Senior
Indebtedness of Enterprise. At November 30, 1997, the Senior Indebtedness of
Enterprise aggregated approximately $75 million. No terms of the Series A
Preferred Securities, the Series A Debentures or the Series A Guarantee limit
Enterprise's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Series A Debentures and the Series A Guarantee. See
"Description of the Guarantee -- Status of the Guarantee" and "Description of
the Debentures -- Subordination" in the accompanying Prospectus.
Enterprise is a holding company whose assets consist principally of the
stock in its wholly owned subsidiaries, Public Service Electric and Gas Company
("PSE&G") and Enterprise Diversified Holdings Incorporated ("EDHI"). Therefore,
Enterprise's rights and the rights of its creditors, including the holders of
Series A Debentures, to participate in the assets of any subsidiary upon the
latter's liquidation or recapitalization or otherwise will be subject to the
prior claims of the subsidiary's creditors, except to the extent that claims of
Enterprise itself as a creditor of the subsidiary may be recognized.
The ability of the Series A Issuer to pay cash distributions
("Distributions") on the Series A Preferred Securities and the redemption price
or liquidation amount of the Series A Preferred Securities is solely dependent
upon Enterprise making the related payments on the Series A Debentures when due.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no event of default with respect to the Series A Debentures (a
"Debenture Event of Default") under the Indenture has occurred and is
continuing, Enterprise has the right at any time and from time to time to defer
payments of interest on the Series A Debentures by extending the interest
payment period on the Series A Debentures for up to 20 consecutive quarters
(each, an "Extension Period"), but not beyond the maturity or any redemption
date of the Series A Debentures. As a consequence, Distributions on the Series A
Preferred Securities would be deferred by the Series A Issuer during any
Extension Period (but the amount of Distributions to which holders of the Series
A Preferred Securities would be entitled would continue to accumulate at the
rate of 7.44% per annum, compounded quarterly). During any Extension Period,
Enterprise may not declare or pay any dividend on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any shares of Enterprise's
capital stock. Prior to the termination of any Extension Period, Enterprise may
shorten or
S-3
<PAGE>
further extend the interest payment period on the Series A Debentures, provided
that such Extension Period, together with all such previous and further
extensions thereof, may not exceed 20 consecutive quarters or extend beyond the
maturity or any redemption date of the Series A Debentures. Upon the termination
of any Extension Period and the payment of all amounts then due, Enterprise may
elect to begin a new Extension Period, subject to the above requirements. See
"Certain Terms of the Series A Preferred Securities -- Distributions" herein and
"Description of the Debentures -- Option to Extend Interest Payment Period" in
the accompanying Prospectus.
Should an Extension Period occur, an owner of Series A Preferred Securities
(which represent undivided beneficial interests in the Series A Debentures) will
continue to accrue interest income for federal income tax purposes in respect of
its pro rata share of the Series A Debentures held by the Series A Issuer. As a
result, an owner of Series A Preferred Securities will include such interest in
gross income for federal income tax purposes in advance of the receipt of cash
and will not receive the cash related to such income from the Series A Issuer if
such owner disposes of the Series A Preferred Securities prior to the record
date for the payment of Distributions following such Extension Period. See
"United States Taxation -- Potential Extension of Interest Payment Period and
Original Issue Discount."
Enterprise has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Debentures. However, should Enterprise exercise such right in the future, the
market price of the Series A Preferred Securities is likely to be affected. An
owner who disposes of Series A Preferred Securities during an Extension Period
might not receive the same return on investment as an owner who continues to
hold Series A Preferred Securities. In addition, as a result of the mere
existence of Enterprise's right to defer interest payments on the Series A
Debentures, the market price of the Series A Preferred Securities may be more
volatile than other securities on which original issue discount accrues that are
not subject to such deferrals.
TRADING CHARACTERISTICS OF THE SERIES A PREFERRED SECURITIES; TAX CONSEQUENCES
The Series A Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the Series A
Debentures. An owner of Series A Preferred Securities who disposes of Series A
Preferred Securities prior to the record date for the payment of Distributions
will nevertheless be required to include accrued but unpaid interest on the
Series A Debentures through the date of disposition in income as ordinary income
and to add such amount to its adjusted tax basis of the Series A Preferred
Securities so disposed. Such owner will recognize a capital loss to the extent
the selling price (which may not fully reflect the value of accrued but unpaid
interest) is less than its adjusted tax basis (which will include accrued but
unpaid interest). Subject to certain limited exceptions, capital losses cannot
be applied to offset ordinary income for federal income tax purposes. See
"United States Taxation."
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Tax Event or an Investment
Company Event (each as defined in "Certain Terms of the Series A Preferred
Securities -- Special Event Redemption"), Enterprise has the right to redeem the
Series A Debentures, in whole but not in part, and therefore cause a mandatory
redemption of the Series A Preferred Securities and common securities of the
Series A Issuer (the "Common Securities" and, together with the Series A
Preferred Securities, the "Trust Securities"), at a redemption price equal to
the liquidation amount plus accumulated and unpaid Distributions, within 90 days
following the occurrence of such Tax Event or Investment Company Event.
DISTRIBUTION OF SERIES A DEBENTURES; POSSIBLE ADVERSE EFFECT ON MARKET PRICE
At any time, Enterprise may, in its sole discretion, dissolve the Series A
Issuer and, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, cause the Series A Debentures to be distributed to
the holders of the Trust Securities, provided that Enterprise shall have
delivered to the Issuer Trustees (as defined herein) an opinion of nationally
recognized tax counsel (which may be regular tax counsel to Enterprise or an
affiliate but not an employee thereof and which must be acceptable to First
Union National Bank, as the Property Trustee for the Series A Issuer (the
"Property Trustee")) that any such distribution will not be a taxable event to
the owners of the Trust Securities. Although Enterprise has agreed to use its
best efforts to list the Series A Debentures so distributed on the New York
Stock Exchange, there can be no assurance that the Series A Debentures will be
approved for listing on the New York Stock Exchange or that a trading market
will exist for the Series A Debentures.
There can be no assurance as to the market prices for the Series A
Debentures that may be distributed in exchange for the Series A Preferred
Securities if a dissolution of the Series A Issuer were to occur. Accordingly,
the Series A Debentures that a holder of Series A Preferred Securities may
receive upon such a distribution, or the Series A Preferred Securities held
S-4
<PAGE>
pending such a distribution, may trade at a discount to the price that the
investor paid to purchase such Series A Preferred Securities. Because holders of
Series A Preferred Securities may receive Series A Debentures at Enterprise's
sole discretion, prospective purchasers of Series A Preferred Securities are
also making an investment decision with regard to the Series A Debentures and
should carefully review all the information regarding the Series A Debentures
contained herein. See "Certain Terms of the Series A Preferred
Securities -- Distribution of Series A Debentures" herein and "Description of
the Debentures" in the accompanying Prospectus.
RIGHTS UNDER THE SERIES A GUARANTEE
The Series A Guarantee has been qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). First Union
National Bank is the indenture trustee under the Series A Guarantee (the
"Guarantee Trustee") for the purposes of compliance with the Trust Indenture Act
and holds the Series A Guarantee for the benefit of the holders of the Series A
Preferred Securities. Under the Series A Guarantee, Enterprise agrees to make
the following payments to the holders of the Series A Preferred Securities, to
the extent not paid by the Series A Issuer: (i) any accumulated and unpaid
Distributions on the Series A Preferred Securities to the extent that the Series
A Issuer has funds available therefor, (ii) the redemption price of any Series A
Preferred Securities called for redemption to the extent that the Series A
Issuer has funds available therefor, and (iii) upon a voluntary or involuntary
dissolution and liquidation of the Series A Issuer (unless the Series A
Debentures are distributed to holders of the Series A Preferred Securities), the
lesser of (a) the liquidation amount of $25 per Series A Preferred Security plus
accumulated and unpaid Distributions to the date of payment, and (b) the amount
of assets of the Series A Issuer available for distribution to holders of Series
A Preferred Securities upon such dissolution and liquidation of the Series A
Issuer. See "Description of the Guarantee -- General" in the accompanying
Prospectus. The holders of at least a majority in aggregate liquidation amount
of the Series A Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Series A Guarantee and to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Series A Guarantee.
Any holder of the Series A Preferred Securities may institute a legal proceeding
directly against Enterprise to enforce its rights under the Series A Guarantee
without first instituting a legal proceeding against the Series A Issuer, the
Guarantee Trustee or any other person or entity. If Enterprise defaults on its
obligation to pay amounts payable on the Series A Debentures, the Series A
Issuer will not have sufficient funds for the payment of Distributions, amounts
payable on redemption of the Series A Preferred Securities or amounts payable
upon liquidation of the Series A Issuer and, accordingly, holders of the Series
A Preferred Securities will not be able to rely upon the Series A Guarantee for
payment of such amounts. Instead, the Property Trustee or holders of the Series
A Preferred Securities may enforce the rights of the Series A Issuer under the
Series A Debentures against Enterprise pursuant to the terms of the Series A
Debentures. The Amended and Restated Trust Agreement of the Series A Issuer (the
"Trust Agreement") provides that each holder of Series A Preferred Securities,
by acceptance thereof, agrees to the provisions of the Trust Agreement, the
Series A Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series A Preferred Securities have limited voting rights under
the Trust Agreement. Holders of Series A Preferred Securities will not be
entitled to vote to appoint, remove or replace the Issuer Trustees, which voting
rights are vested exclusively in Enterprise as the holder of the Common
Securities, except that upon the occurrence of an event of default under the
Trust Agreement, the holders of at least a majority in aggregate liquidation
amount of the Series A Preferred Securities may replace the Property Trustee and
the Delaware Trustee (as defined herein). See "Description of the Preferred
Securities -- Voting Rights; Amendment of Trust Agreement" and " -- Removal of
Issuer Trustees" in the accompanying Prospectus.
ENTERPRISE CAPITAL TRUST I
Enterprise Capital Trust I is a statutory business trust created under the
laws of the State of Delaware and operated pursuant to the Trust Agreement. The
exclusive business of the Series A Issuer is to issue and sell the Trust
Securities representing undivided beneficial interests in the assets of the
Series A Issuer and to use the proceeds therefrom to purchase the Series A
Debentures, to maintain the status of the Series A Issuer as a grantor trust for
federal income tax purposes and to engage in only those activities that are
necessary, convenient or incidental to the foregoing. Accordingly, the Series A
Debentures will be the sole assets of the Series A Issuer and payments on the
Series A Debentures will be the sole revenues of the Series A Issuer. Pursuant
to the Trust Agreement, Enterprise will be obligated to pay all expenses and
liabilities of the Series A Issuer except the Series A Issuer's obligations
under the Series A Preferred Securities. The Series A Issuer has a term of 54
S-5
<PAGE>
years, but may be dissolved earlier as provided in the Trust Agreement. See
"Description of the Preferred Securities -- Liquidation Distribution Upon
Dissolution" in the accompanying Prospectus.
The business and affairs of the Series A Issuer are conducted by three
trustees: (i) First Union National Bank, as Property Trustee; (ii) an affiliate
of the Property Trustee with its principal place of business in the State of
Delaware, as "Delaware Trustee"; and (iii) one individual who is an officer of
or affiliated with Enterprise, as "Administrative Trustee." The Property
Trustee, the Delaware Trustee and the Administrative Trustee are collectively
referred to herein as the "Issuer Trustees." The Trust Agreement is qualified as
an indenture under the Trust Indenture Act and the Property Trustee is the
indenture trustee thereunder for the purposes of compliance with the Trust
Indenture Act.
Concurrently with the issuance of the Series A Preferred Securities,
Enterprise will acquire Common Securities of the Series A Issuer with a
liquidation amount equal to 3% of the aggregate liquidation amount of all of the
Trust Securities of the Series A Issuer. The Common Securities rank pari passu,
and payments will be made thereon pro rata, with the Series A Preferred
Securities, except that upon the occurrence and continuance of a Debenture Event
of Default, the rights of Enterprise, as holder of the Common Securities, to
payment of Distributions and payments upon redemption and liquidation will be
subordinated to the rights of the holders of the Series A Preferred Securities.
The principal place of business of the Series A Issuer is 80 Park Plaza,
P.O. Box 1171, Newark, New Jersey 07101 and its telephone number is (973)
430-7000.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
GENERAL
Enterprise is a public utility holding company that neither owns nor
operates any physical properties. Enterprise has two direct, wholly owned
subsidiaries, PSE&G and EDHI. Enterprise's principal subsidiary, PSE&G, is an
operating public utility providing electric and gas service in certain areas of
the State of New Jersey. EDHI is the parent of Enterprise's non-utility
businesses: Community Energy Alternatives Incorporated, Public Service Resources
Corporation, Energis Resources Incorporated, Enterprise Group Development
Corporation, PSEG Capital Corporation and Enterprise Capital Funding
Corporation.
RATIO OF EARNINGS TO FIXED CHARGES
Enterprise's ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ---------------------------------------- 12 MONTHS ENDED
1992 1993 1994 1995 1996 SEPTEMBER 30, 1997
- ---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C>
2.33 2.57 2.84 2.78 2.68 2.56
</TABLE>
The ratio of earnings to fixed charges represents, on a pre-tax basis, the
number of times earnings cover fixed charges. Earnings consist of net income, to
which has been added fixed charges and taxes based on income of Enterprise and
its subsidiaries. Fixed charges consist of interest charges, an interest factor
in rentals and preferred securities dividend requirements of subsidiaries.
USE OF PROCEEDS
The net proceeds from the sale of the Series A Preferred Securities and the
Common Securities will be used by the Series A Issuer to purchase the Series A
Debentures from Enterprise. The net proceeds from the sale of the Series A
Debentures will be used by Enterprise for general corporate purposes, including
additional investments in EDHI and the reimbursement of its treasury for funds
expended therefor.
S-6
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of
Enterprise and its subsidiaries as of September 30, 1997 and as adjusted to give
effect to the issuance of the Series A Preferred Securities offered hereby and
the use of proceeds therefrom. The following data should be read in conjunction
with the consolidated financial statements and notes thereto of Enterprise and
its subsidiaries incorporated herein by reference.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1997
----------------------
(UNAUDITED)
ACTUAL AS ADJUSTED
--------- -----------
<S> <C> <C>
(IN MILLIONS)
Common Equity
Common Stock........................................................................................ $ 3,603 $ 3,603
Retained Earnings................................................................................... 1,596 1,588
------- -----------
Total Common Equity.............................................................................. 5,199 5,191
Preferred Stock without mandatory redemption.......................................................... 95 95
Preferred Stock with mandatory redemption............................................................. 75 75
Monthly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures................... 210 210
Quarterly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures................. 303 303
Trust Originated Preferred Securities................................................................. -- 225
Long-Term Debt........................................................................................ 4,623 4,623
------- -----------
Total Capitalization............................................................................. $10,505 $10,722
======== ===========
</TABLE>
CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES
The following summary of certain terms and provisions of the Series A
Preferred Securities supplements the description of the terms and provisions of
the Preferred Securities set forth in the accompanying Prospectus under the
heading "Description of the Preferred Securities," to which description
reference is hereby made.
DISTRIBUTIONS
The Series A Preferred Securities represent undivided beneficial interests
in the assets of the Series A Issuer, the sole assets of which will be the
Series A Debentures. Distributions on the Series A Preferred Securities are
cumulative and will accumulate from the date of original issuance at the annual
rate of 7.44% of the liquidation amount of $25 per Series A Preferred Security.
Distributions will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing March 31, 1998.
Distributions in arrears after the quarterly payment date therefor will
accumulate additional Distributions (to the extent permitted by law) compounded
quarterly at the annual rate of 7.44% thereof. The term "Distributions," as used
herein, shall include any such additional Distributions. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
So long as no Debenture Event of Default has occurred and is continuing,
Enterprise has the right at any time and from time to time to defer the payment
of interest by extending the interest payment period on the Series A Debentures
for up to 20 consecutive quarters, provided that any such Extension Period shall
not extend beyond the maturity or any redemption date of the Series A
Debentures. As a consequence, quarterly Distributions on the Series A Preferred
Securities would be deferred by the Series A Issuer during any Extension Period,
but the amount of Distributions to which holders of the Series A Preferred
Securities would be entitled would continue to accumulate at the rate set forth
above, compounded quarterly. During any Extension Period, Enterprise may not
declare or pay any dividend on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any shares of Enterprise's capital stock.
Prior to the termination of any Extension Period, Enterprise may shorten or
further extend the interest payment period on the Series A Debentures, provided
that such Extension Period, together with all such previous and further
extensions thereof, may not exceed 20 consecutive quarters or extend beyond the
maturity or any redemption date of the Series A Debentures. Upon the termination
of any Extension Period and the payment of all amounts then due, Enterprise may
elect to begin a new Extension Period, subject to the above requirements. See
"United States Taxation -- Potential Extension of Interest Payment Period and
Original Issue Discount" herein and "Description of the Debentures -- Option to
Extend Interest Payment Period" in the accompanying Prospectus. Enterprise has
no current intention of exercising its right to defer payments of interest by
extending the interest payment period on the Series A Debentures.
S-7
<PAGE>
The Series A Preferred Securities are issued in the form of one or more
global securities and The Depository Trust Company ("DTC") or any successor
depositary will act as depositary for the Series A Preferred Securities. See
"Description of the Preferred Securities -- Book-Entry-Only Issuance -- The
Depository Trust Company" in the accompanying Prospectus. Payments on the Series
A Preferred Securities represented by a global security will be made in
immediately available funds to DTC, as the depositary for the Series A Preferred
Securities. In the event that the Series A Preferred Securities are issued in
certificated form, the payment of Distributions and payments on redemption or
liquidation will be payable, the transfer of the Series A Preferred Securities
will be registerable and Series A Preferred Securities will be exchangeable at
the corporate office of the Property Trustee in Newark, New Jersey, or at the
offices of any other paying agent or transfer agent appointed by the
Administrative Trustee; provided, however, that the payment of Distributions may
be made at the option of the Property Trustee by check mailed to the address of
the persons entitled thereto or by wire transfer. In addition, if the Series A
Preferred Securities are issued in certificated form, the record dates for the
payment of Distributions will be the 15th day of the last month of each quarter,
whether or not a Business Day.
REDEMPTION
Upon the payment of the Series A Debentures at maturity or upon redemption
as provided in the Indenture, the proceeds from such payment will be applied by
the Property Trustee to redeem a Like Amount of the Trust Securities, upon not
less than 30 nor more than 60 days' notice, at a redemption price equal to the
aggregate liquidation amount plus accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price"). See "Certain Terms of the Series A
Debentures -- Redemption."
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having an aggregate liquidation amount equal to the
principal amount of Series A Debentures to be paid in accordance with the
Indenture and (ii) with respect to a distribution of Series A Debentures to
holders of Trust Securities in connection with a dissolution and liquidation of
the Series A Issuer, Series A Debentures having a principal amount equal to the
aggregate liquidation amount of the Trust Securities in exchange for which such
Series A Debentures are distributed.
SPECIAL EVENT REDEMPTION
If a Tax Event or an Investment Company Event (each, a "Special Event") has
occurred and is continuing, Enterprise has the right to redeem the Series A
Debentures, in whole but not in part, and therefore cause a mandatory redemption
of the Trust Securities, in whole but not in part, at the Redemption Price
within 90 days following the occurrence of such Special Event.
"Tax Event" means that Enterprise shall have received an opinion of counsel
(which may be counsel to Enterprise or an affiliate but not an employee thereof
and which must be acceptable to the Property Trustee) experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the date of original issuance
of the Series A Preferred Securities, there is more than an insubstantial risk
that (i) the Series A Issuer is, or will be, subject to federal income tax with
respect to interest on the Series A Debentures, (ii) interest payable by
Enterprise on the Series A Debentures is not, or will not be, deductible by
Enterprise for federal income tax purposes or (iii) the Series A Issuer is, or
will be, subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges.
"Investment Company Event" means the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law") to the effect that the Series A Issuer is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, as amended, which Change in 1940 Act Law becomes
effective on or after the date of original issuance of the Series A Preferred
Securities.
DISTRIBUTION OF SERIES A DEBENTURES
At any time, Enterprise may, in its sole discretion, dissolve the Series A
Issuer and, after satisfaction of liabilities of creditors of the Trust, cause a
Like Amount of Series A Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Series A Issuer upon 30 days' prior notice to
the holders of the Trust Securities, provided that Enterprise shall have
delivered to the Issuer Trustees an opinion of nationally recognized tax counsel
(which may be regular tax counsel
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<PAGE>
to Enterprise or an affiliate but not an employee thereof and which must be
acceptable to the Property Trustee) that any such distribution will not be a
taxable event to the owners of the Trust Securities for federal income tax
purposes. In addition, the Series A Debentures may be distributed to holders of
Trust Securities in certain other circumstances as described under "Certain
Terms of the Preferred Securities -- Liquidation Distribution Upon Dissolution"
in the accompanying Prospectus.
LIQUIDATION AMOUNT
The amount payable on the Series A Preferred Securities in the event of the
dissolution and liquidation of the Series A Issuer is $25 per Series A Preferred
Security plus accumulated and unpaid Distributions to the date of payment,
unless, in connection therewith, the Series A Debentures are distributed to the
holders of the Trust Securities.
CERTAIN TERMS OF THE SERIES A DEBENTURES
The following summary of certain terms and provisions of the Series A
Debentures supplements the description of the terms and provisions of the
Debentures set forth in the accompanying Prospectus under the heading
"Description of the Debentures," to which description reference is hereby made.
The Series A Debentures are unsecured and rank subordinate and junior in
right of payment to all Senior Indebtedness of Enterprise.
INTEREST RATE; MATURITY
Concurrently with the issuance of the Series A Preferred Securities, the
Series A Issuer is investing the proceeds thereof, together with the
consideration paid by Enterprise for the Common Securities, in the Series A
Debentures. The Series A Debentures will be issued as a series of Debentures
under the Indenture. The Series A Debentures will mature on March 31, 2047. The
Series A Debentures will bear interest at the annual rate of 7.44% of the
principal amount thereof, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing March 31, 1998. Interest
which is accrued and unpaid after the quarterly payment date therefor will bear
additional interest on the amount thereof (to the extent permitted by law) at
the annual rate of 7.44% thereof, compounded quarterly. The term "interest," as
used herein, shall include quarterly interest payments and interest on quarterly
interest payments in arrears, as applicable. The interest payment provisions for
the Series A Debentures correspond to the Distribution provisions of the Series
A Preferred Securities.
REDEMPTION
The Series A Debentures are redeemable prior to maturity at the option of
Enterprise at a redemption price equal to 100% of the principal amount thereof
plus accrued and unpaid interest to the redemption date (i) at any time on or
after March 31, 2003, in whole or in part, or (ii) if a Special Event has
occurred and is continuing, in whole but not in part.
DISTRIBUTION OF SERIES A DEBENTURES
If Series A Debentures are distributed to the holders of the Trust
Securities upon the dissolution and liquidation of the Series A Issuer, the
Series A Debentures will be issued in denominations of $25 and integral
multiples thereof. It is anticipated that the Series A Debentures would be
distributed in the form of one or more global securities and DTC, or any
successor depositary for the Series A Preferred Securities, would act as
depositary for the Series A Debentures. The depositary arrangements for the
Series A Debentures would be substantially similar to those in effect for the
Series A Preferred Securities. None of Enterprise, the Debenture Trustee, any
paying agent or any other agent of Enterprise or the Debenture Trustee will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global security
for such Series A Debentures or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests. For a description of
DTC and the terms of the depositary arrangements relating to payments,
transfers, voting rights, redemption and other notices and other matters, see
"Description of the Preferred Securities -- Book-Entry-Only Issuance -- The
Depository Trust Company" in the accompanying Prospectus.
Payments on the Series A Debentures represented by a global security will
be made in immediately available funds to DTC, as the depositary for the Series
A Debentures. In the event that the Series A Debentures are issued in
certificated form, principal and interest will be payable, the transfer of the
Series A Debentures will be registrable and the Series A Debentures will be
exchangeable for Series A Debentures of other authorized denominations of a like
aggregate principal amount, at the corporate office of the Debenture Trustee in
Newark, New Jersey, or at the offices of any other paying agent or transfer
agent
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<PAGE>
appointed by Enterprise; provided, however, that payment of interest may be made
at the option of Enterprise by check mailed to the address of the persons
entitled thereto or by wire transfer. In addition, if the Series A Debentures
are issued in certificated form, the record dates for payment of interest will
be the 15th day of the last month of each quarter, whether or not a Business
Day.
If the Series A Debentures are distributed to the holders of the Trust
Securities upon the dissolution and liquidation of the Series A Issuer,
Enterprise will use its best efforts to list the Series A Debentures on the
New York Stock Exchange.
UNITED STATES TAXATION
GENERAL
This section is a summary of certain federal income tax considerations that
may be relevant to prospective purchasers of Series A Preferred Securities and
is the opinion of Ballard Spahr Andrews & Ingersoll, special tax counsel to
Enterprise and the Series A Issuer, insofar as it relates to matters of law and
legal conclusions. This section is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), existing regulations thereunder
and current administrative rulings and court decisions, all of which are subject
to change. Subsequent changes may cause tax consequences to vary substantially
from the consequences described below. Unless otherwise stated, this summary
deals only with Series A Preferred Securities held as capital assets and does
not deal with special classes of holders, such as dealers in securities or
currencies, life insurance companies, persons holding Series A Preferred
Securities as a hedge against or which are hedged against currency risks or as a
part of a straddle, or persons whose functional currency is not the United
States dollar.
POTENTIAL INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE OF SERIES A
PREFERRED SECURITIES PURSUANT TO THE OFFERING MADE HEREBY AND OF THE OWNERSHIP
AND DISPOSITION OF SERIES A PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR
CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER LAWS.
In the opinion of Ballard Spahr Andrews & Ingersoll, the Series A
Debentures will be treated as indebtedness for federal income tax purposes.
However, holders of Series A Preferred Securities should note that the Internal
Revenue Service (the "IRS") may attempt to treat the Series A Debentures as
equity rather than indebtedness for tax purposes, as described below. If the IRS
were successful in such attempt, the Series A Debentures would be subject to
redemption at the option of Enterprise as described under "Certain Terms of the
Series A Debentures -- Redemption" and "Certain Terms of the Series A Preferred
Securities -- Special Event Redemption."
From time to time, the Clinton Administration has proposed certain tax law
changes that would, among other things, generally deny interest deductions to a
corporate issuer if the debt instrument has a term exceeding 20 years and is not
reflected as indebtedness on such issuer's consolidated balance sheet. Because
the term of the Series A Debentures exceeds 20 years, if a proposal of this sort
were to become effective retroactively, Enterprise would be precluded from
deducting interest on the Series A Debentures. In the opinion of Ballard Spahr
Andrews & Ingersoll, under current law, interest on the Series A Debentures is
deductible. There can be no assurance, however, that a legislative proposal
which would affect the ability of Enterprise to deduct interest on the Series A
Debentures might not be adopted which, in turn, might give rise to a Tax Event
and, accordingly, Enterprise's optional right to redeem the Series A Debentures,
thereby causing a mandatory redemption of Series A Preferred Securities, as
described under "Certain Terms of the Series A Preferred Securities -- Special
Event Redemption."
INCOME FROM SERIES A PREFERRED SECURITIES
In connection with the issuance of the Series A Debentures, in the opinion
of Ballard Spahr Andrews & Ingersoll, under current law and assuming full
compliance with the terms of the Trust Agreement, the Series A Issuer will be
classified as a grantor trust and not as an association taxable as a corporation
or partnership for federal income tax purposes.
As a consequence, each owner of Series A Preferred Securities will be
considered the owner of a pro rata portion of the Series A Debentures held by
the Series A Issuer. As a further consequence, each owner of Series A Preferred
Securities will be required to include in gross income his or her pro rata share
of the income accrued on the Series A Debentures held by the Series A Issuer.
Such income should not exceed Distributions received by the owners of Series A
Preferred Securities on the Series A Preferred Securities except in limited
circumstances described under " -- Potential Extension of Interest Payment
Period and Original Issue Discount." No portion of such income will be eligible
for the dividends-received deduction available to corporate taxpayers.
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<PAGE>
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Under the Indenture, Enterprise may from time to time extend the interest
payment period on the Series A Debentures for up to 20 consecutive quarters but
not beyond the maturity or any redemption date of the Series A Debentures.
Enterprise's right to defer payments of interest by extending the interest
payment period will cause the Series A Debentures to be treated as issued with
"original issue discount" for federal income tax purposes. Accordingly, an owner
of Series A Preferred Securities will accrue interest income (i.e., original
issue discount) under a constant yield basis over the term of the Series A
Debentures (including any Extension Period), regardless of the receipt of cash
with respect to the period to which such income is attributable.
As a result, owners of Series A Preferred Securities during an Extension
Period will include interest in gross income in advance of the receipt of cash,
and any owners of Series A Preferred Securities who dispose of Series A
Preferred Securities prior to the record date for the payment of Distributions
following such Extension Period will include interest in gross income, but will
not receive any cash related thereto. The tax basis of a Series A Preferred
Security will be increased by the amount of any original issue discount that is
included in income without a receipt of cash and will be decreased when and if
such cash is subsequently received by the owner of the Series A Preferred
Security.
DISPOSITION OF THE SERIES A PREFERRED SECURITIES
Gain or loss will be recognized on a sale, including a redemption for cash,
of Series A Preferred Securities (which represent undivided beneficial interests
in the Series A Debentures) in an amount equal to the difference between the
amount realized and the tax basis of an owner of Series A Preferred Securities
in his or her pro rata share of the Series A Debentures. Gain or loss recognized
by an owner of Series A Preferred Securities on the sale or exchange of Series A
Preferred Securities generally will be taxable as capital gain or loss and in
the case of noncorporate holders will be subject to tax at the rates applicable
to mid-term gain if the Series A Preferred Securities have been held for more
than one year but less than 18 months or at the rates applicable to adjusted net
capital gains if the Series A Preferred Securities have been held for more than
18 months on the date of sale.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder or beneficial owner who or which is (i) a nonresident alien individual or
(ii) a foreign corporation, partnership, estate or trust, in either case not
subject to federal income tax on a net income basis in respect of a Series A
Preferred Security.
Under present federal income tax law, subject to the discussion below with
respect to backup withholding:
(i) payments by the Series A Issuer or any of its paying agents to any
United States Alien Holder will not be subject to federal withholding tax,
provided that (a) the owner of the Series A Preferred Security does not actually
or constructively own 10% or more of the total combined voting power of all
classes of stock of Enterprise, (b) the owner of the Series A Preferred
Securities is not a controlled foreign corporation that is related to Enterprise
through stock ownership and (c) either (1) the owner of the Series A Preferred
Securities certifies to the Series A Issuer or its agent, under penalties of
perjury, that it is a United States Alien Holder and provides its name and
address or (2) the holder of the Series A Preferred Securities is a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and such holder certifies to the Series A Issuer or its agent,
under penalties of perjury, that such statement has been received from the owner
by it or by a financial institution between it and the owner and furnishes the
payor with a copy thereof; and
(ii) a United States Alien Holder of a Series A Preferred Security will not
be subject to federal income or withholding tax on any gain realized on the sale
or exchange of a Series A Preferred Security unless such person is present in
the United States for 183 days or more in the taxable year of sale and such
person has a "tax home" in the United States or certain other requirements are
met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments to
noncorporate United States holders of the proceeds of the sale of the Series A
Preferred Securities within the United States and "backup withholding" at a rate
of 31% will apply to such payments if the seller fails to provide a correct
taxpayer identification number. Information reporting requirements and backup
withholding will also apply to original issue discount allocable to noncorporate
United States holders of the Series A Preferred Securities if the seller fails
to provide a correct taxpayer identification number.
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Payments of the proceeds from the sale by a United States Alien Holder of
Series A Preferred Securities made to or through a foreign office of a broker
will not be subject to information reporting or backup withholding, except that,
if the broker is a United States person, a controlled foreign corporation for
United States tax purposes or a foreign person 50% or more of whose gross income
is effectively connected with a United States trade or business for a specified
three-year period, information reporting may apply to such payment. Payments of
the proceeds from a sale of Series A Preferred Securities to or through the
United States office of a broker is subject to information reporting and backup
withholding unless the holder or beneficial owner certifies as to its non-United
States status or otherwise establishes an exemption from information reporting
and backup withholding. Effective for payments made after December 31, 1998,
subject to certain transition rules, certain modifications to the backup
withholding and information rules described above will be applicable.
Prospective investors should consult their own tax advisors concerning these new
rules.
RECEIPT OF SERIES A DEBENTURES UPON LIQUIDATION OF THE SERIES A ISSUER
Enterprise may cause the Series A Issuer to be dissolved and cause the
Series A Debentures to be distributed to the holders of Series A Preferred
Securities in liquidation of such holders' interests in the Series A Issuer,
provided that Enterprise has delivered to the Issuer Trustees an opinion of
nationally recognized tax counsel (which may be regular tax counsel to
Enterprise or an affiliate but not an employee thereof and which must be
acceptable to the Property Trustee) that any such distribution will not be a
taxable event to the owners of the Series A Preferred Securities for federal
income tax purposes. Under current federal income tax law and assuming the
Series A Issuer is treated as a grantor trust, such a distribution should not be
treated as a taxable event to owners of the Series A Preferred Securities. If
such a dissolution is tax-free, the owner of Series A Preferred Securities will
take an aggregate tax basis in the Series A Debentures equal to such owner's
aggregate tax basis in the Series A Preferred Securities, and a holding period
for such Series A Debentures which will include the period during which such
owner owned the Series A Preferred Securities.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Series A Issuer has agreed to sell to each of the Underwriters named below, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman, Sachs & Co.
are acting as Representatives (the "Representatives"), and each of the
Underwriters has severally agreed to purchase from the Series A Issuer, the
respective number of Series A Preferred Securities set forth opposite its name
below:
<TABLE>
<CAPTION>
NUMBER OF SERIES A
PREFERRED
UNDERWRITER SECURITIES
------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................................. 1,200,000
Goldman, Sachs & Co................................................................... 1,200,000
A.G. Edwards & Sons, Inc.............................................................. 1,100,000
Morgan Stanley & Co. Incorporated..................................................... 1,100,000
PaineWebber Incorporated.............................................................. 1,100,000
Prudential Securities Incorporated.................................................... 1,100,000
BT Alex. Brown Incorporated........................................................... 100,000
Bear, Stearns & Co. Inc............................................................... 100,000
CIBC Oppenheimer Corp................................................................. 100,000
Cowen & Company....................................................................... 100,000
Dain Rauscher Incorporated............................................................ 100,000
Donaldson, Lufkin & Jenrette Securities Corporation................................... 100,000
EVEREN Securities, Inc................................................................ 100,000
The Ohio Company...................................................................... 100,000
Piper Jaffray Inc..................................................................... 100,000
Raymond James & Associates, Inc....................................................... 100,000
Tucker Anthony Incorporated........................................................... 100,000
Wheat, First Securities, Inc.......................................................... 100,000
Advest, Inc........................................................................... 50,000
Blaylock & Partners, L.P.............................................................. 50,000
J.C. Bradford & Co.................................................................... 50,000
Fahnestock & Co. Inc.................................................................. 50,000
</TABLE>
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<TABLE>
<S> <C>
First Albany Corporation.............................................................. 50,000
Gibraltar Securities Co............................................................... 50,000
Gruntal & Co., L.L.C.................................................................. 50,000
Interstate/Johnson Lane Corporation................................................... 50,000
Janney Montgomery Scott Inc........................................................... 50,000
Legg Mason Wood Walker, Incorporated.................................................. 50,000
McDonald & Company Securities, Inc.................................................... 50,000
McGinn, Smith & Co., Inc.............................................................. 50,000
Mesirow Financial, Inc................................................................ 50,000
Morgan Keegan & Company, Inc.......................................................... 50,000
The Robinson-Humphrey Company, LLC.................................................... 50,000
Roney & Co., LLC...................................................................... 50,000
Scott & Stringfellow, Inc............................................................. 50,000
Stifel, Nicolaus & Company, Incorporated.............................................. 50,000
Trilon International Inc.............................................................. 50,000
US Clearing Corp...................................................................... 50,000
------------------
Total.................................................................... 9,000,000
------------------
------------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Series A Preferred
Securities offered hereby if any are taken.
The Underwriters propose to offer the Series A Preferred Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and in part to certain securities
dealers at such price less a concession of $.50 per Series A Preferred Security.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of $.45 per Series A Preferred Security to certain brokers and dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
In view of the fact that the proceeds from the sale of the Series A
Preferred Securities will be used to purchase the Series A Debentures, under the
Underwriting Agreement, Enterprise has agreed to pay to the Underwriters an
underwriting commission of $.7875 per Series A Preferred Security.
Prior to this offering, there has been no public market for the Series A
Preferred Securities. The Series A Preferred Securities have been authorized for
listing on the New York Stock Exchange upon official notice of issuance. Trading
on the Series A Preferred Securities is expected to commence within a 30-day
period after the initial delivery thereof. In order to meet one of the
requirements for listing the Series A Preferred Securities on the New York Stock
Exchange, the Underwriters have undertaken to sell the Series A Preferred
Securities to a minimum of 400 beneficial owners. The Representatives have
advised Enterprise that they intend to make a market in the Series A Preferred
Securities prior to the commencement of trading on the New York Stock Exchange,
but are not obligated to do so and may discontinue market making at any time
without notice. No assurance can be given as to the liquidity of the trading
market for the Series A Preferred Securities.
Enterprise and the Series A Issuer have agreed, during the period beginning
from the date of the Underwriting Agreement and continuing to and including the
earlier of (i) the date on which the distribution of the Series A Preferred
Securities ceases, as determined by the Representatives, or (ii) 30 days after
the closing date, not to offer, sell, contract to sell or otherwise dispose of
any preferred securities or any preferred stock or any other securities of
Enterprise which are substantially similar to the Series A Preferred Securities,
including any guarantee of such securities, or any securities convertible into
or exchangeable for or representing the right to receive any of the foregoing
securities, without the prior written consent of the Representatives.
In connection with this offering, the rules of the Securities and Exchange
Commission permit the Representatives to engage in transactions that stabilize
the price of the Series A Preferred Securities. Such transactions may consist of
bids or purchases for the purpose of pegging, fixing or maintaining the price of
the Series A Preferred Securities.
If the Underwriters create a short position in the Series A Preferred
Securities in connection with this offering (i.e., if they sell more Series A
Preferred Securities than are set forth on the cover page of this Prospectus
Supplement), the Representatives may reduce that short position by purchasing
Series A Preferred Securities in the open market.
The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
Series A Preferred Securities in the open market to reduce the Underwriters'
short position or
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to stabilize the price of the Series A Preferred Securities, they may reclaim
the amount of the selling concession from the Underwriters and selling group
members who sold that Series A Preferred Securities as part of this offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might also have an effect on the price of a security
to the extent that it were to discourage resales of the security by purchasers
in the offering.
None of Enterprise, the Series A Issuer or any of the Underwriters makes
any representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Series A
Preferred Securities. In addition, none of Enterprise, the Series A Issuer or
any of the Underwriters makes any representation that the Representatives will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
Enterprise and the Series A Issuer have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act.
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PROSPECTUS
ENTERPRISE CAPITAL TRUST I
ENTERPRISE CAPITAL TRUST II
ENTERPRISE CAPITAL TRUST III
TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT THE ISSUER THEREOF HAS
AVAILABLE FUNDS AS SET FORTH HEREIN BY
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
------------------------
Enterprise Capital Trust I, Enterprise Capital Trust II and Enterprise
Capital Trust III, each a statutory business trust created under the laws of the
State of Delaware (each, an "Issuer," and collectively, the "Issuers") may
severally offer, from time to time, their respective trust preferred securities
(the "Preferred Securities") representing undivided beneficial interests in the
assets of such Issuer. Public Service Enterprise Group Incorporated, a New
Jersey corporation ("Enterprise"), will be the owner of beneficial interests
represented by the common securities (the "Common Securities") of each Issuer.
First Union National Bank is the Property Trustee of each Issuer. Concurrently
with the issuance by each Issuer of its Preferred Securities, such Issuer will
invest the proceeds thereof, together with the consideration paid by Enterprise
for the Common Securities of such Issuer, in a corresponding series of
Enterprise's deferrable interest subordinated debentures (the "Debentures"). The
Debentures will be subordinate and junior in right of payment to all Senior
Indebtedness (as defined herein) of Enterprise. The Debentures will be the sole
assets of each Issuer and payments in respect of the Debentures will be the only
revenues of each Issuer.
Pursuant to a guarantee agreement to be entered into by Enterprise with
respect to each series of Preferred Securities (each, a "Guarantee"), Enterprise
will agree to make payments of cash distributions with respect to the Preferred
Securities of each Issuer and payments on liquidation or redemption with respect
to such Preferred Securities but only to the extent that such Issuer holds funds
available therefor and has not made such payments. The obligations of Enterprise
under each Guarantee will be subordinate and junior in right of payment to all
general liabilities of Enterprise. As described herein, each Guarantee, together
with Enterprise's obligations under the Debentures, the Indenture relating to
such Debentures and the Amended and Restated Trust Agreement for each Issuer,
will provide for Enterprise's full, irrevocable and unconditional guarantee of
the Preferred Securities.
The Preferred Securities may be offered in amounts, at prices and on terms
to be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Preferred Securities issued pursuant to the
Registration Statement of which this Prospectus forms a part shall not exceed
$225,000,000. Certain specific terms of an Issuer's Preferred Securities will be
set forth in an accompanying Prospectus Supplement, including where applicable
and to the extent not set forth herein, the identity of such Issuer, the
specific title, the aggregate number, the distribution rate (or the method for
determining such rate) and frequency, the liquidation amount, redemption
provisions, the right, if any, of Enterprise to dissolve such Issuer and, after
satisfaction of liabilities to creditors of the Issuer, cause the corresponding
series of Debentures to be distributed to the holders of such Issuer's Preferred
Securities and Common Securities, the period during which interest on the
corresponding series of Debentures may be deferred, the initial public offering
price, and any other special terms, as well as any planned listing on a
securities exchange, of such Preferred Securities.
The Preferred Securities may be sold in a public offering to or through
underwriters or dealers designated from time to time. See "Plan of
Distribution." The names of any such underwriters or dealers involved in the
sale of the Preferred Securities of a particular Issuer, the number of Preferred
Securities to be purchased by any such underwriters or dealers and any
applicable commissions or discounts will be set forth in the accompanying
Prospectus Supplement. The net proceeds to each Issuer will also be set forth in
the accompanying Prospectus Supplement.
The accompanying Prospectus Supplement will contain information concerning
material federal income tax considerations applicable to the Preferred
Securities offered thereby.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is January 8, 1998.
<PAGE>
STATEMENT OF AVAILABLE INFORMATION
Public Service Enterprise Group Incorporated, a New Jersey corporation
("Enterprise"), is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission ("SEC"). Such reports and other information can be inspected and
copied at the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. and at its regional offices at 500 West Madison
Street, Chicago, Illinois and 7 World Trade Center, New York, New York. Copies
of such reports and other information may also be obtained from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549-1004 at prescribed rates. Such reports and other information can also be
inspected at the New York Stock Exchange, Inc. (the "New York Stock Exchange")
where certain of Enterprise's securities are listed. In addition, the SEC
maintains a Web site that contains reports, proxy and other information
regarding registrants that file electronically with the SEC. The address of such
Web site is http://www.sec.gov.
No separate financial statements of Enterprise Capital Trust I, Enterprise
Capital Trust II or Enterprise Capital Trust III, each a statutory business
trust created under the laws of the State of Delaware (each, an "Issuer," and
collectively, the "Issuers"), have been included herein. Enterprise and the
Issuers do not consider that such financial statements would be material to
holders of any Issuer's trust preferred securities (the "Preferred Securities")
because each Issuer is a newly formed special purpose entity, has no operating
history or independent operations and is not engaged in and does not propose to
engage in any activity other than holding as trust assets the corresponding
series of deferrable interest subordinated debentures (the "Debentures") of
Enterprise and issuing Preferred Securities and common securities (the "Common
Securities," and together with the Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in such Debentures. See "The
Issuers," "Description of the Preferred Securities" and "Description of the
Debentures."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Enterprise with the SEC pursuant to the
Exchange Act are incorporated herein by reference:
1. Enterprise's Annual Report on Form 10-K for the year ended December 31,
1996; and
2. Enterprise's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997.
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering of the related Preferred Securities shall be deemed
to be incorporated by reference in this Prospectus and the accompanying
Prospectus Supplement and shall be a part hereof and thereof from the date of
filing of such document. Any statement contained herein or therein or in a
document all or a portion of which is incorporated or deemed to be incorporated
by reference herein and therein shall be deemed to be modified or superseded for
purposes of this Prospectus and the accompanying Prospectus Supplement to the
extent that a statement contained herein or therein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
and therein 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 Prospectus or the accompanying Prospectus
Supplement.
Enterprise undertakes to provide without charge to each person, including
any beneficial owner, to whom this Prospectus and the accompanying Prospectus
Supplement are delivered, upon written or oral request of such person, a copy of
any or all documents described above under "Incorporation of Certain Documents
by Reference," other than exhibits to such documents not specifically
incorporated by reference therein. Such requests should be directed to the
Director-Investor Relations, Public Service Electric and Gas Company, 80 Park
Plaza, T6B, P.O. Box 570, Newark, New Jersey 07101, telephone (973) 430-6503.
THE ISSUERS
Each of Enterprise Capital Trust I, Enterprise Capital Trust II and
Enterprise Capital Trust III is a statutory business trust created under
Delaware law pursuant to (i) a trust agreement executed by Enterprise, as
sponsor for each Issuer, and the Issuer Trustees (as defined below) and (ii) the
filing of a certificate of trust with the Delaware Secretary of State. Each
trust agreement will be amended and restated in its entirety (each, as so
amended and restated, a "Trust Agreement") substantially
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in the form filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Each Trust Agreement will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
Each Issuer exists for the exclusive purposes of issuing and selling its
Trust Securities and using the proceeds from the sale of its Trust Securities to
acquire a corresponding series of Debentures, maintaining the status of the
Issuer as a grantor trust for federal income tax purposes and engaging in those
activities necessary, convenient or incidental to the foregoing. All of the
Common Securities of each Issuer will be owned by Enterprise. The Common
Securities of an Issuer will rank pari passu, and payments will be made thereon
pro rata, with the Preferred Securities of that Issuer, except that upon the
occurrence and continuance of an event of default with respect to the
corresponding series of Debentures (a "Debenture Event of Default") under the
Indenture dated as of January 1, 1998 (as amended and supplemented from time to
time, the "Indenture") between Enterprise and First Union National Bank, as
trustee (the "Debenture Trustee"), the rights of the holders of such Common
Securities to payment of cash distributions ("Distributions") and payments upon
redemption and liquidation will be subordinated to the rights of the holders of
such Preferred Securities. The Indenture will be qualified as an indenture under
the Trust Indenture Act.
Each Issuer's business and affairs are conducted by three trustees, each
appointed by Enterprise as holder of the Common Securities: (i) First Union
National Bank (the "Property Trustee"); (ii) an affiliate of the Property
Trustee that has its principal place of business in the State of Delaware (the
"Delaware Trustee"); and (iii) one individual trustee who is an employee or
officer of or affiliated with Enterprise (the "Administrative Trustee," and
collectively with the Property Trustee and the Delaware Trustee, the "Issuer
Trustees"). The holder of the Common Securities, or the holders of at least a
majority in aggregate liquidation amount of an Issuer's Preferred Securities if
an event of default under the Trust Agreement (a "Trust Agreement Event of
Default") has occurred and is continuing, will be entitled to remove and replace
the Property Trustee and the Delaware Trustee. In no event will the holders of
the Preferred Securities have the right to vote to appoint, remove or replace
the Administrative Trustee, which voting rights are vested exclusively in the
holder of the Common Securities. The duties and obligations of each of the
Issuer Trustees are governed by the applicable Trust Agreement.
Pursuant to the Trust Agreement of each Issuer, Enterprise will pay all
fees and expenses related to that Issuer and the offering of its Preferred
Securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of that Issuer except such Issuer's obligations under its Preferred
Securities.
The principal place of business of each Issuer is 80 Park Plaza, Newark,
New Jersey 07101, and its telephone number is (973) 430-7000.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Public Service Enterprise Group Incorporated is a public utility holding
company that neither owns nor operates any physical properties. Enterprise has
two direct, wholly owned subsidiaries, Public Service Electric and Gas Company
("PSE&G") and Enterprise Diversified Holdings Incorporated ("EDHI").
Enterprise's principal subsidiary, PSE&G, is an operating public utility
providing electric and gas service in certain areas of the State of New Jersey.
EDHI is the parent of Enterprise's non-utility businesses: Community Energy
Alternatives Incorporated, Public Service Resources Corporation, Energis
Resources Incorporated, Enterprise Group Development Corporation, PSEG Capital
Corporation and Enterprise Capital Funding Corporation.
Enterprise's executive offices are located at 80 Park Plaza, Newark,
New Jersey 07101, and its telephone number is (973) 430-7000.
USE OF PROCEEDS
The proceeds to be received by the Issuers from the sale of the Preferred
Securities offered hereby will be used by the Issuers to purchase Debentures
from Enterprise. Unless otherwise specified in the accompanying Prospectus
Supplement, the proceeds from the sale of the Debentures will be used by
Enterprise for general corporate purposes.
DESCRIPTION OF THE PREFERRED SECURITIES
Pursuant to the terms of each Trust Agreement, the Issuers will issue the
Preferred Securities and the Common Securities. The Preferred Securities of an
Issuer will represent undivided beneficial interests in the assets of such
Issuer and the holders thereof will be entitled to a preference in certain
circumstances with respect to the payment of Distributions and amounts payable
on redemption or liquidation over the Common Securities of such Issuer, as well
as other benefits as
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described in the applicable Trust Agreement. Each of the Issuers is a legally
separate entity and the assets of one are not available to satisfy the
obligations of any other.
GENERAL
The Preferred Securities of each Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer except
as described under " -- Subordination of Common Securities." The proceeds from
the sale of the Preferred Securities and the Common Securities will be used by
the related Issuer to purchase a corresponding series of Debentures from
Enterprise. The Debentures will be held in trust by the Property Trustee for the
benefit of the holders of the related Trust Securities. Each Guarantee Agreement
executed by Enterprise for the benefit of the holders of each Issuer's Preferred
Securities (each, a "Guarantee") will be subordinate and junior in right of
payment to all general liabilities of Enterprise. Pursuant to each Guarantee,
Enterprise will agree to make payments of Distributions and payments on
redemption or liquidation with respect to such Preferred Securities, but only to
the extent the related Issuer holds funds available therefor and has not made
such payments. See "Description of the Guarantee."
It is anticipated that the assets of each Issuer available for distribution
to the holders of its Preferred Securities will be limited to payments from
Enterprise under the corresponding series of Debentures in which such Issuer
will invest the proceeds from the issuance and sale of its Trust Securities. See
"Description of the Debentures." If Enterprise fails to make a payment on a
series of Debentures, the related Issuer will not have sufficient funds to make
related payments, including Distributions, on the corresponding series of
Preferred Securities.
DISTRIBUTIONS
Distributions on the Preferred Securities of each Issuer will be payable at
a rate specified in the accompanying Prospectus Supplement for such Preferred
Securities. The amount of Distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative and will
accumulate from the date of original issuance and will be payable in arrears on
the dates specified in the accompanying Prospectus Supplement except as
otherwise described below. In the event that any date on which Distributions are
otherwise payable on the Preferred Securities is not a Business Day (as defined
below), payment of such Distributions will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect to
any such delay), except that if such Business Day is in the next succeeding
calendar year, payment of such Distributions shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date (each date on which Distributions are payable in accordance with
the foregoing is referred to herein as a "Distribution Date"). A "Business Day"
shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in The City of New York or the State of New Jersey are required by
law or executive order to remain closed.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the securities register of the related Issuer on the
relevant record date, which, as long as the Preferred Securities remain in
book-entry-only form, will be one Business Day prior to the relevant
Distribution Date. Subject to any applicable laws and regulations and the
provisions of the applicable Trust Agreement, each such payment will be made as
described under " -- Book-Entry-Only Issuance -- The Depository Trust Company."
In the event that any Preferred Securities are not in book-entry-only form, the
relevant record date for such Preferred Securities will be specified in the
applicable Prospectus Supplement.
So long as no Debenture Event of Default has occurred and is continuing
with respect to a series of Debentures, Enterprise will have the right at any
time and from time to time to defer payments of interest by extending the
interest payment period on such series of Debentures for up to the maximum
period specified in the accompanying Prospectus Supplement for such series of
Debentures (each, an "Extension Period"), provided that any such Extension
Period shall not extend beyond the maturity or any redemption date of the
Debentures of such series. As a consequence, Distributions on the corresponding
Preferred Securities would be deferred by the Issuer thereof during such
Extension Period, but the amount of Distributions to which holders of the
Preferred Securities would be entitled will continue to accumulate at the annual
rate applicable to Distributions thereon, compounded with the same frequency
with which Distributions are payable. During any Extension Period, Enterprise
may not declare or pay any dividend on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any shares of Enterprise's capital stock.
Prior to the termination of any Extension Period, Enterprise may shorten or
further extend the interest payment period on a series of Debentures, provided
that such Extension Period, together with all such previous and further
extensions thereof, may not exceed the maximum Extension Period or extend beyond
the maturity or any redemption date of such Debentures. Upon the termination of
any Extension Period and the payment of all amounts
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then due, Enterprise may elect to begin a new Extension Period, subject to the
above requirements. See "Description of the Debentures -- Option to Extend
Interest Payment Period."
REDEMPTION
Upon the payment of any series of Debentures at maturity or upon
redemption, the proceeds from such payment will be applied by the Property
Trustee to redeem a like amount of the corresponding Trust Securities of the
Issuer thereof at a redemption price (the "Redemption Price") equal to the
liquidation amount of such Trust Securities plus all accumulated and unpaid
Distributions to the redemption date (the "Redemption Date"). The redemption
terms of a particular series of Debentures and the corresponding Trust
Securities will be set forth in the accompanying Prospectus Supplement.
If less than all the Trust Securities of the Issuer thereof are to be
redeemed on a Redemption Date, then the aggregate amount of such Trust
Securities to be redeemed shall be selected by the Property Trustee among such
Issuer's Preferred Securities and Common Securities pro rata based on the
respective aggregate liquidation amounts of such Preferred Securities and Common
Securities, subject to the provisions of " -- Subordination of Common
Securities."
REDEMPTION PROCEDURES
Notice of any redemption of Trust Securities will be given by the Property
Trustee to the holders of such Trust Securities to be redeemed not less than 30
nor more than 60 days prior to the Redemption Date. If a notice of redemption is
given with respect to any Trust Securities, then, to the extent funds are
available therefor, the Issuer thereof will irrevocably deposit with the paying
agent for such Trust Securities funds sufficient to pay the applicable
Redemption Price for the Trust Securities being redeemed on the Redemption Date
and will give such paying agent irrevocable instructions and authority to pay
the Redemption Price to the holders of such Trust Securities upon surrender
thereof. Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Trust Securities called for redemption shall be payable
to the holders of such Trust Securities on the relevant record dates for the
related Distribution Dates.
If notice of redemption shall have been given and funds irrevocably
deposited as required, then upon the date of such deposit, all rights of the
holders of such Trust Securities so called for redemption will cease, except the
right of the holders of such Trust Securities to receive the Redemption Price,
but without interest thereon, and such Trust Securities will cease to be
outstanding. In the event that any Redemption Date for Trust Securities is not a
Business Day, then the Redemption Price will be payable on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay), except that if such Business Day is in the next succeeding
calendar year, the Redemption Price will be payable on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date. In the event that payment of the Redemption Price in respect of any Trust
Securities called for redemption is improperly withheld or refused and not paid
either by the Issuer thereof or by Enterprise pursuant to the Guarantee as
described under "Description of the Guarantee," Distributions on such Trust
Securities will continue to accumulate at the then applicable rate from the
original Redemption Date to the date of payment, in which case the actual
payment date will be considered the Redemption Date for purposes of calculating
the Redemption Price.
Subject to applicable law, Enterprise or its subsidiaries may at any time
and from time to time purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer's
Trust Securities, as applicable, shall be made pro rata based on the respective
aggregate liquidation amounts of such Trust Securities; provided, however, that
if a Debenture Event of Default has occurred and is continuing with respect to
the corresponding series of Debentures, no payment of any Distribution on, or
Redemption Price of, any of such Issuer's Common Securities, and no other
payment on account of the liquidation of such Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions on
all of such Issuer's outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of a redemption, the
full amount of such Redemption Price on all of such Issuer's outstanding
Preferred Securities shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, all of such Issuer's
outstanding Preferred Securities then due and payable.
If a Debenture Event of Default has occurred and is continuing with respect
to a series of Debentures, the holder of the related Issuer's Common Securities
will be deemed to have waived any right to act with respect to such Debenture
Event of Default until the effect of such Debenture Event of Default has been
cured, waived or otherwise eliminated. Until any such
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Debenture Event of Default has been so cured, waived or otherwise eliminated,
the Property Trustee shall act solely on behalf of the holders of the
corresponding Preferred Securities and not on behalf of Enterprise, as holder of
such Common Securities, and only the holders of such Preferred Securities will
have the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to its Trust Agreement, each Issuer shall be dissolved on the
earliest to occur of: (i) the expiration of the term of such Issuer; (ii) the
bankruptcy, dissolution or liquidation of Enterprise or an acceleration of the
maturity of the corresponding series of Debentures held by such Issuer; (iii) if
provided for in the accompanying Prospectus Supplement, upon the election of
Enterprise to dissolve such Issuer and, after satisfaction of liabilities to
creditors of such Issuer, cause the distribution of the corresponding series of
Debentures to the holders of such Issuer's Trust Securities; (iv) the redemption
of all of such Issuer's Trust Securities; and (v) an order for the dissolution
of such Issuer shall have been entered by a court of competent jurisdiction. The
election of Enterprise pursuant to clause (iii) above shall be made by
Enterprise giving written notice to the Issuer Trustees not less than 30 days
prior to the date of distribution of the corresponding series of Debentures and
shall be accompanied by an opinion of counsel that such event will not be a
taxable event to the holders of the Trust Securities for federal income tax
purposes.
If a dissolution event occurs as described in clause (i), (ii) or (v) above
with respect to any Issuer, such Issuer shall be liquidated by the Issuer
Trustees as expeditiously as the Issuer Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of such Issuer as
provided by applicable law, to the holders of its Trust Securities a like amount
of the corresponding series of Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of such Issuer available
for distribution to holders, after satisfaction of liabilities to creditors of
such Issuer as provided by applicable law, an amount equal to, in the case of
holders of Trust Securities, the aggregate liquidation amount per Trust Security
specified in the accompanying Prospectus Supplement plus accumulated and unpaid
Distributions thereon to the date of payment (such amount, the "Liquidation
Distribution"). If the Liquidation Distribution with respect to an Issuer's
Preferred Securities can be paid only in part because such Issuer has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable by such Issuer on such Preferred
Securities shall be paid on a pro rata basis. The holders of such Issuer's
Common Securities will be entitled to receive the Liquidation Distribution upon
any such liquidation pro rata with the holders of its Preferred Securities,
except that if a Debenture Event of Default has occurred and is continuing the
Preferred Securities shall have a priority over the Common Securities with
respect to payment of such Liquidation Distribution.
TRUST AGREEMENT EVENT OF DEFAULT; NOTICE
A Debenture Event of Default shall constitute a Trust Agreement Event of
Default with respect to the Preferred Securities issued by the related Issuer
under its Trust Agreement.
Within 90 days after the occurrence of any Trust Agreement Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Trust Agreement Event of Default to the holders of the
corresponding Trust Securities, the Administrative Trustee and Enterprise,
unless such Trust Agreement Event of Default shall have been cured or waived.
Enterprise and the Administrative Trustee are required to file annually with the
Property Trustee a certificate as to whether or not they are in compliance with
all the conditions and covenants applicable to them under each Trust Agreement.
Under each Trust Agreement, if the Property Trustee has failed to enforce
its rights under the Trust Agreement or the Indenture to the fullest extent
permitted by law and subject to the terms of the Trust Agreement and the
Indenture, any holder of the corresponding Preferred Securities may institute a
legal proceeding directly to enforce the Property Trustee's rights under the
Trust Agreement or the Indenture with respect to Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such holder without first instituting a legal proceeding against the Property
Trustee or any other person. To the extent that any action under the Indenture
is entitled to be taken by the holders of at least a specified percentage of the
principal amount of a series of Debentures, holders of the corresponding
Preferred Securities may take such action if such action is not taken by the
Property Trustee. Notwithstanding the foregoing, if a Trust Agreement Event of
Default attributable to Enterprise's failure to pay principal of or premium, if
any, or interest on the Debentures of any series has occurred and is continuing,
then each holder of Preferred Securities of the corresponding series may
institute a legal proceeding directly against Enterprise for enforcement of any
such payment to such holder, all as provided in the Indenture.
If a Debenture Event of Default has occurred and is continuing with respect
to a series of Debentures, the corresponding Preferred Securities shall have a
preference over the related Issuer's Common Securities with respect to the
payment of
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Distributions and amounts payable on redemption and liquidation as described
above. See " -- Liquidation Distribution Upon Dissolution" and
" -- Subordination of Common Securities."
REMOVAL OF ISSUER TRUSTEES
Unless a Trust Agreement Event of Default has occurred and is continuing,
any Issuer Trustee may be removed and replaced at any time by the holder of the
Common Securities. If a Trust Agreement Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee may be removed and
replaced at such time only by the holders of at least a majority in aggregate
liquidation amount of the outstanding Preferred Securities. In no event will the
holders of the Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustee, which voting rights are vested exclusively
in the holder of the Common Securities. No resignation or removal of an Issuer
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless a Trust Agreement Event of Default has occurred and is continuing,
at any time and from time to time, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property (as defined in each Trust Agreement) may at such time be
located, the holder of the Common Securities and the Administrative Trustee
shall have the power (i) to appoint one or more persons approved by the Property
Trustee either to act as co-trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to act as separate trustee of any such
Trust Property, in either case with such powers as may be provided in the
instrument of appointment, and (ii) to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. If a Trust
Agreement Event of Default has occurred and is continuing, only the Property
Trustee shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation or other entity into which any Issuer Trustee may be merged
or converted or with which it may be consolidated, or any corporation or other
entity resulting from any merger, conversion or consolidation to which any
Issuer Trustee shall be a party, or any corporation or other entity succeeding
to all or substantially all the corporate trust business of any Issuer Trustee,
shall be the successor of such Issuer Trustee under the applicable Trust
Agreement, provided such corporation or other entity shall be otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUERS
An Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other entity,
except as described below or in " -- Liquidation Distribution Upon Dissolution."
An Issuer may, at the request of Enterprise, with the consent of the
Administrative Trustee and without the consent of the holders of its Preferred
Securities, merge with or into, consolidate, amalgamate, or be replaced by a
trust organized as such under the laws of any State, provided that (i) such
successor entity either (a) expressly assumes all of the obligations of such
Issuer with respect to such Preferred Securities or (b) substitutes for such
Preferred Securities other securities substantially similar to such Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as such Preferred Securities rank with respect to the payment of
Distributions and payments upon redemption and liquidation, (ii) Enterprise
expressly appoints a trustee of such successor entity possessing the same powers
and duties as the Property Trustee with respect to the corresponding series of
Debentures, (iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which such Preferred Securities are
then listed, (iv) such merger, consolidation, amalgamation or replacement does
not cause such Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of such Preferred
Securities (including any Successor Securities) in any material respect, (vi)
such successor entity has a purpose substantially similar to that of such
Issuer, (vii) prior to such merger, consolidation, amalgamation or replacement,
Enterprise has received an opinion of counsel to such Issuer to the effect that
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of such Preferred
Securities (including any Successor Securities) in any material respect, and (B)
following such merger, consolidation, amalgamation or replacement, neither such
Issuer nor such successor entity will be required to register as an investment
company under the Investment Company Act of 1940, as 7
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amended (the "Investment Company Act"), and (viii) Enterprise or any permitted
successor assignee owns all of the common securities of such successor entity
and guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the related Guarantee and Trust
Agreement. Notwithstanding the foregoing, an Issuer shall not, except with the
consent of all holders of its Preferred Securities, consolidate, amalgamate,
merge with or into, or be replaced by, any other entity, or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause such Issuer or
the successor entity not to be classified as a grantor trust for federal income
tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under " -- Mergers, Consolidations,
Amalgamations or Replacements of the Issuers" and "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
applicable Trust Agreement, the holders of the Preferred Securities will have no
voting rights.
A Trust Agreement may be amended from time to time by Enterprise and the
Issuer Trustees, without the consent of the holders of the corresponding
Preferred Securities, (i) to cure any ambiguity, defect or inconsistency or (ii)
to make any other change that does not adversely affect in any material respect
the interests of any holder of such Preferred Securities. A Trust Agreement may
be amended by Enterprise and the Issuer Trustees in any other respect, with the
consent of the holders of at least a majority in aggregate liquidation amount of
such Preferred Securities, except to (i) change the amount, timing or currency
or otherwise adversely affect the method of payment of any Distribution or
Liquidation Distribution, (ii) restrict the right of a holder of any such
Preferred Security to institute suit for enforcement of any Distribution,
Redemption Price or Liquidation Distribution, (iii) change the purpose of the
related Issuer, (iv) authorize the issuance of any additional beneficial
interests in the related Issuer, (v) change the redemption provisions, (vi)
change the conditions precedent for Enterprise to elect to dissolve the related
Issuer and distribute the corresponding series of Debentures to the holders of
such Preferred Securities or (vii) affect the limited liability of any holder of
such Preferred Securities, which amendment requires the consent of each holder
of the related Preferred Securities affected thereby. Notwithstanding the
foregoing, no amendment may be made without receipt by the related Issuer of an
opinion of counsel to the effect that such amendment will not affect such
Issuer's status as a grantor trust for federal income tax purposes or its
exemption from regulation as an investment company under the Investment Company
Act.
The Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee or
executing any trust or power conferred on the Debenture Trustee with respect to
the corresponding series of Debentures, (ii) waive any past default pursuant to
Section 6.04 of the Indenture, (iii) exercise any right to rescind or annul an
acceleration of the principal of the corresponding series of Debentures or (iv)
consent to any amendment or modification of the Indenture, where such consent
shall be required, without, in each case, obtaining the consent of the holders
of at least a majority in aggregate liquidation amount of all outstanding
Preferred Securities of the corresponding series; provided, however, that where
a consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of the corresponding Preferred
Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of such Preferred Securities
except by subsequent vote of the holders thereof. The Property Trustee shall
notify all holders of Preferred Securities of any notice received from the
Debenture Trustee as a result of the Issuer thereof being the holder of the
corresponding Debentures. In addition to obtaining the consent of the holders of
the Preferred Securities of the corresponding series, prior to taking any of the
foregoing actions, the Issuer Trustees shall obtain an opinion of counsel to the
effect that the related Issuer will not be classified as an association taxable
as a corporation or a partnership for federal income tax purposes on account of
such action and will continue to be classified as a grantor trust for federal
income tax purposes.
Any required consent of holders of Preferred Securities may be given at a
meeting of holders of such Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be given to each holder of record of such Preferred Securities in the manner set
forth in the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under certain circumstances, any Preferred Securities that are owned
by Enterprise, the Issuer Trustees or any affiliate of Enterprise or any Issuer
Trustee shall, for purposes of such vote or consent, be treated as if they were
not outstanding.
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BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
all of the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's nominee)
as the holder thereof. One or more fully-registered global securities will be
issued for the Preferred Securities of each Issuer, representing in the
aggregate the total number of such Issuer's Preferred Securities, and will be
deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain custodial relationships with Direct Participants, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the SEC.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities of such Issuer is
discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the Preferred Securities. If less than all of an Issuer's Preferred Securities
are being redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to the Preferred Securities. Under its usual procedures, DTC would mail
an omnibus proxy (the "Omnibus Proxy") to the Property Trustee as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts such
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Payments in respect of the Preferred Securities will be made in immediately
available funds by the Property Trustee on behalf of the related Issuer to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices and will be the responsibility of
such Participant and not of DTC, the Property Trustee, the Issuer of the
relevant Preferred Securities or Enterprise, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payments in
respect of the Preferred Securities to DTC are the responsibility of the
Property Trustee on behalf of the related Issuer, disbursement of such payments
to Direct Participants is the responsibility of DTC and disbursements of such
payments to the Beneficial Owners is the responsibility of the Direct and
Indirect Participants.
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DTC may discontinue providing its services as securities depositary with
respect to any series of Preferred Securities at any time by giving reasonable
notice to the Property Trustee and Enterprise. In the event that a successor
securities depositary is not obtained, definitive Preferred Security
certificates representing such Preferred Securities are required to be printed
and delivered. Enterprise, at its option, may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary) as a
result of such discontinuance or as a result of DTC's ineligibility to so act,
in which case definitive certificates for such Preferred Securities will be
issued. After a Trust Agreement Event of Default, the related Issuer will issue
definitive certificates for such Issuer's Preferred Securities. Upon
distribution of definitive Preferred Securities certificates, owners of such
Preferred Securities will become the registered holders of such Preferred
Securities.
The information set forth above concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and Enterprise believe to be
accurate, but the Issuers and Enterprise assume no responsibility for the
accuracy thereof. Neither the Issuers nor Enterprise has any responsibility for
the performance by DTC or its Participants of their respective obligations as
described herein or under the rules and procedures governing their respective
operations.
In the event that the book-entry-only system is discontinued, the payment
of any Distribution, Redemption Price and Liquidation Distribution in respect of
a series of Preferred Securities will be payable in the manner described in the
accompanying Prospectus Supplement, and the following provisions would apply.
The Property Trustee shall keep the registration books for such Preferred
Securities at its corporate office. Such Preferred Securities may be transferred
or exchanged for one or more Preferred Securities upon surrender thereof at the
corporate office of the Property Trustee by the holders or their duly authorized
attorneys or legal representatives. Upon surrender of any Preferred Securities
to be transferred or exchanged, the Property Trustee shall record the
registration of transfer or exchange in the registration books and shall deliver
new Preferred Securities appropriately registered. The Property Trustee shall
not be required to register the transfer of any Preferred Securities that have
been called for redemption or on or after the liquidation date. The Issuers and
the Property Trustee shall be entitled to treat the holders of the related
Preferred Securities, as their names appear in the registration books, as the
owners of those Preferred Securities for all purposes under the applicable Trust
Agreement.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee is the sole Trustee under each Trust Agreement for
purposes of the Trust Indenture Act and shall have and be subject to all of the
duties and responsibilities specified with respect to an indenture trustee under
the Trust Indenture Act. The Property Trustee, other than during the occurrence
and continuance of a Trust Agreement Event of Default, undertakes to perform
only such duties as are specifically set forth in each Trust Agreement and, upon
a Trust Agreement Event of Default, must use the same degree of care and skill
in the exercise thereof as a prudent person would exercise or use in the conduct
of his or her own affairs. Subject to this provision, the Property Trustee is
under no obligation to exercise any of the powers vested in it by any Trust
Agreement at the request of any holder of Preferred Securities unless it is
offered reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred thereby. If no Trust Agreement Event of
Default has occurred and is continuing, and the Property Trustee is required to
decide between alternative courses of action, construe ambiguous provisions in a
Trust Agreement or is unsure of the application of any provision of a Trust
Agreement, and the matter is not one on which holders of Preferred Securities
are entitled under such Trust Agreement to vote, then the Property Trustee shall
take such action as is directed by Enterprise and, if not so directed, may take
such action as it deems advisable and in the best interests of the holders of
the corresponding Trust Securities and will have no liability except for its own
negligent action, negligent failure to act or willful misconduct.
MISCELLANEOUS
The Administrative Trustee is authorized and directed to conduct the
affairs of and to operate the Issuers in such a way that (i) no Issuer will be
deemed to be an "investment company" required to be registered under the
Investment Company Act or to be taxed as a corporation or partnership for
federal income tax purposes, (ii) each Issuer will be classified as a grantor
trust for federal income tax purposes and (iii) the Debentures held by such
Issuers will be treated as indebtedness of Enterprise for federal income tax
purposes. In this connection, Enterprise and the Administrative Trustee are
authorized to take any action, not inconsistent with applicable law, the
applicable certificate of trust of the related Issuer or the applicable Trust
Agreement, that Enterprise and the Administrative Trustee determine in their
discretion to be necessary or desirable for such purposes, even if such action
adversely affects the interests of the holders of the corresponding Preferred
Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer may borrow money, issue debt, execute mortgages or pledge any of
its assets.
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Except as otherwise provided in the Trust Agreements, any action requiring
the consent or vote of the Issuer Trustees shall be approved by the
Administrative Trustee.
GOVERNING LAW
The Trust Agreements will be governed by and construed in accordance with
the laws of the State of Delaware.
DESCRIPTION OF THE GUARANTEE
Each Guarantee will be executed and delivered by Enterprise concurrently
with the issuance by each Issuer of its Preferred Securities for the benefit of
the holders from time to time of such Preferred Securities. Each Guarantee will
be qualified as an indenture under the Trust Indenture Act and First Union
National Bank will act as indenture trustee (the "Guarantee Trustee") under each
Guarantee for the purposes of compliance with the Trust Indenture Act. Reference
under this caption to Preferred Securities means the Preferred Securities to
which a Guarantee relates. The Guarantee Trustee will hold each Guarantee for
the benefit of the holders of the related Issuer's Preferred Securities.
GENERAL
Enterprise will irrevocably agree, to the extent set forth in each
Guarantee, to pay in full, to the holders of the related Issuer's Preferred
Securities, the Guarantee Payments (as defined below) (except to the extent
previously paid), as and when due, regardless of any defense, right of set-off
or counterclaim which such Issuer may have or assert. The following payments, to
the extent not paid by an Issuer (the "Guarantee Payments"), will be subject to
the applicable Guarantee (without duplication): (i) any accumulated and unpaid
Distributions required to be paid on such Preferred Securities, to the extent
that such Issuer has funds available therefor, (ii) the Redemption Price to the
extent that such Issuer has funds available therefor, and (iii) upon a voluntary
or involuntary dissolution and liquidation of such Issuer (unless the
corresponding series of Debentures are distributed to holders of such Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount specified
in the Prospectus Supplement per Preferred Security plus all accumulated and
unpaid Distributions on the Preferred Securities to the date of payment, to the
extent the Issuer has funds available therefor and (b) the amount of assets of
such Issuer remaining available for distribution to holders of Preferred
Securities upon a dissolution and liquidation of such Issuer. Enterprise's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by Enterprise to the holders of the corresponding Preferred
Securities or by causing the related Issuer to pay such amounts to such holders.
While the assets of Enterprise will not be available pursuant to the Guarantee
for the payment of any Distribution, Liquidation Distribution or Redemption
Price on any Preferred Securities if the related Issuer does not have funds
available therefor as described above, Enterprise has agreed under the
applicable Trust Agreement to pay all expenses of such Issuer except such
Issuer's obligations under its Preferred Securities. Accordingly, the applicable
Guarantee, together with the backup undertakings consisting of Enterprise's
obligations under the applicable Trust Agreement, the corresponding series of
Debentures and the Indenture, provide for Enterprise's full, irrevocable and
unconditional guarantee of the Preferred Securities.
No single document executed by Enterprise in connection with the issuance
of a series of Preferred Securities will provide for Enterprise's full,
irrevocable and unconditional guarantee of the Preferred Securities. It is only
the combined operation of Enterprise's obligations under the applicable
Guarantee, the applicable Trust Agreement, the corresponding series of
Debentures and the Indenture that has the effect of providing a full,
irrevocable and unconditional guarantee of an Issuer's obligations under its
Preferred Securities. See "Relationship Among the Preferred Securities, the
Debentures and the Guarantee."
STATUS OF THE GUARANTEE
Each Guarantee will constitute an unsecured obligation of Enterprise and
will rank subordinate and junior in right of payment to all general liabilities
of Enterprise. The Trust Agreements provide that each holder of Preferred
Securities by acceptance thereof agrees to the subordination provisions and
other terms of the related Guarantee. Each Guarantee will rank pari passu with
all other Guarantees issued by Enterprise. Each Guarantee will constitute a
guarantee of payment and not of collection (i.e., the guaranteed party may
institute a legal proceeding directly against Enterprise to enforce its rights
under the Guarantee without first instituting a legal proceeding against any
other person or entity). Each Guarantee will not be discharged except by payment
of the Guarantee Payments in full to the extent not previously paid or upon
distribution to the holders of the Preferred Securities of the corresponding
series of Debentures pursuant to the applicable Trust Agreement.
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the corresponding Preferred Securities (in which case
no consent of the holders will be required), no Guarantee may be amended without
the prior approval of the holders of at least a majority in aggregate
liquidation amount of such Preferred Securities (excluding any Preferred
Securities held by Enterprise or an affiliate thereof). The manner of obtaining
any such approval will be as set forth under "Description of the Preferred
Securities -- Voting Rights; Amendment of Trust Agreement." All agreements
contained in each Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of Enterprise and shall inure to the benefit of the
holders of the corresponding Preferred Securities.
GUARANTEE EVENTS OF DEFAULT
An event of default under a Guarantee (a "Guarantee Event of Default") will
occur upon the failure of Enterprise to perform any of its payment or other
obligations thereunder, provided that except with respect to a Guarantee Event
of Default resulting from a failure to make any of the Guarantee Payments,
Enterprise shall have received notice of such Guarantee Event of Default from
the Guarantee Trustee and shall not have cured such Guarantee Event of Default
within 60 days after receipt of such notice. The holders of at least a majority
in aggregate liquidation amount of the corresponding Preferred Securities
(excluding any Preferred Securities held by Enterprise or an affiliate thereof)
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of such
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under such Guarantee.
Any holder of the corresponding Preferred Securities may institute a legal
proceeding directly against Enterprise to enforce such holder's rights under
such Guarantee without first instituting a legal proceeding against the related
Issuer, the Guarantee Trustee or any other person or entity.
Enterprise, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not Enterprise is in compliance
with all the conditions and covenants applicable to it under each Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a Guarantee Event of Default, undertakes to perform only such duties as are
specifically set forth in each Guarantee and, upon a Guarantee Event of Default,
must exercise such of the rights and powers vested in it by the Guarantee and to
use the same degree of care and skill in the exercise thereof as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, the Guarantee Trustee is under no obligation to exercise any
of the powers vested in it by any Guarantee at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price or Liquidation Distribution for the
corresponding Preferred Securities or upon distribution of the corresponding
series of Debentures to the holders of the corresponding Preferred Securities.
Each Guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of the corresponding Preferred Securities must
restore payment of any sums paid under such Preferred Securities or such
Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New Jersey.
DESCRIPTION OF THE DEBENTURES
GENERAL
The Debentures will be issued in one or more series under the Indenture.
Each series of Debentures will rank pari passu with all other series of
Debentures. Each series of Debentures will be unsecured and will rank
subordinate and junior in right of payment, to the extent and in the manner set
forth in the Indenture, to all Senior Indebtedness (as defined below) of
Enterprise. See " -- Subordination." The Indenture does not limit the incurrence
or issuance of Senior Indebtedness by Enterprise.
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Enterprise is a holding company whose assets consist principally of the
stock in its wholly owned subsidiaries, PSE&G and EDHI. Therefore, Enterprise's
rights and the rights of its creditors, including the holders of the Debentures,
to participate in the assets of any subsidiary upon the latter's liquidation or
recapitalization or otherwise will be subject to the prior claims of the
subsidiary's creditors, except to the extent that claims of Enterprise itself as
a creditor of the subsidiary may be recognized.
The accompanying Prospectus Supplement will describe the following terms of
any series of Debentures: (i) the title of such series of Debentures; (ii) the
aggregate principal amount of such series of Debentures; (iii) the date or dates
on which the principal of such series of Debentures shall be payable or the
method of determination thereof; (iv) the rate or rates, if any, at which such
series of Debentures shall bear interest, the interest payment dates on which
any such interest shall be payable or the method by which any of the foregoing
shall be determined; (v) any terms regarding redemption; (vi) the maximum
Extension Period for such series of Debentures; and (vii) any other terms of
such series of Debentures not inconsistent with the provisions of the Indenture.
Certain federal income tax consequences and special considerations relating
to the applicable series of Debentures will be described in the accompanying
Prospectus Supplement.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Under the Indenture, Enterprise shall have the right at any time and from
time to time, so long as no Debenture Event of Default has occurred and is
continuing with respect to such series of Debentures, to defer payments of
interest by extending the interest payment period for such series of Debentures
for up to the maximum Extension Period provided for such series of Debentures,
provided that no Extension Period shall extend beyond the maturity or any
redemption date of such series of Debentures. At the end of the Extension
Period, Enterprise shall be obligated to pay all interest then accrued and
unpaid (together with interest thereon to the extent permitted by applicable
law). During any Extension Period, Enterprise may not declare or pay any
dividend on, or redeem, purchase, acquire, or make a liquidation payment with
respect to, any shares of Enterprise's capital stock. Prior to the termination
of any Extension Period, Enterprise may shorten or further extend the interest
payment period, provided that such Extension Period, together with all such
previous and further extensions thereof, may not exceed the maximum Extension
Period for such series of Debentures or extend beyond the maturity or any
redemption date of such series of Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, Enterprise may elect
to begin a new Extension Period, subject to the above requirements. Enterprise
shall be required to give notice to the Debenture Trustee and cause the
Debenture Trustee to give notice to the holders of the applicable series of
Debentures of its election to begin an Extension Period, or any shortening or
extension thereof, at least one Business Day prior to the date the notice of the
record or payment date of the related Distribution on the corresponding series
of Preferred Securities or payment of interest on such Debentures is required to
be given to any national securities exchange on which such Debentures or such
Preferred Securities are then listed or other applicable self-regulatory
organization but in any event not less than two Business Days prior to such
record date.
SUBORDINATION
All payments by Enterprise in respect of the Debentures shall be
subordinated to the prior payment in full of all amounts payable on Senior
Indebtedness. The term "Senior Indebtedness" means (i) the principal of and
premium, if any, in respect of (a) indebtedness of Enterprise for money borrowed
and (b) indebtedness evidenced by securities, debentures, bonds or other similar
instruments issued by Enterprise; (ii) all capital lease obligations of
Enterprise; (iii) all obligations of Enterprise issued or assumed as the
deferred purchase price of property, all conditional sale obligations of
Enterprise and all obligations of Enterprise under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) certain obligations of Enterprise for the reimbursement of any
obligation, any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction entered into in the ordinary course of
business of Enterprise; (v) all obligations of the type referred to in clauses
(i) through (iv) of other persons and all dividends of other persons (other than
the Preferred Securities or similar securities) for the payment of which, in
either case, Enterprise is responsible or liable as obligor, guarantor or
otherwise (other than each Guarantee and obligations ranking pari passu with
such Guarantee); and (vi) certain obligations of the type referred to in clauses
(i) through (v) of other persons secured by any lien on any property or asset of
Enterprise (whether or not such obligation is assumed by Enterprise), except for
any such indebtedness that is by its terms subordinated to or pari passu with
the Debentures and for indebtedness between or among Enterprise and its
affiliates.
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Upon any payment or distribution of assets or securities of Enterprise,
upon any dissolution or winding-up or total or partial liquidation or
reorganization of Enterprise, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all amounts payable
on Senior Indebtedness (including any interest accruing on such Senior
Indebtedness subsequent to the commencement of a bankruptcy, insolvency or
similar proceeding) shall be paid in full before the holders of the Debentures
or the Debenture Trustee on behalf of such holders shall be entitled to receive
from Enterprise any payment of principal of, premium, if any, or interest on,
the Debentures or distributions of any assets or securities.
No direct or indirect payment by or on behalf of Enterprise of principal
of, premium, if any, or interest on, the Debentures, whether pursuant to the
terms of the Debentures or upon acceleration or otherwise, shall be made if, at
the time of such payment, there exists (i) a default in the payment of all or
any portion of any Senior Indebtedness or (ii) any other default pursuant to
which the maturity of Senior Indebtedness has been accelerated and, in either
case, requisite notice has been given to the Debenture Trustee and such default
shall not have been cured or waived by or on behalf of the holders of such
Senior Indebtedness.
If the Debenture Trustee or any holder of the Debentures shall have
received any payment on account of the principal of, premium, if any, or
interest on, the Debentures when such payment is prohibited and before all
amounts payable on Senior Indebtedness are paid in full, then such payment shall
be received and held in trust for the holders of Senior Indebtedness and shall
be paid to the holders of the Senior Indebtedness remaining unpaid to the extent
necessary to pay such Senior Indebtedness in full.
Nothing in the Indenture shall limit the right of the Debenture Trustee or
the holders of the Debentures to take any action to accelerate the maturity of
the Debentures or to pursue any rights or remedies against Enterprise, provided
that all Senior Indebtedness shall be paid before holders of the Debentures are
entitled to receive any payment from Enterprise of principal of, premium, if
any, or interest on, the Debentures.
Upon the payment in full of all Senior Indebtedness, the holders of the
Debentures shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of assets of Enterprise made
on such Senior Indebtedness until the Debentures shall be paid in full.
CERTAIN COVENANTS OF ENTERPRISE
Enterprise will covenant that it may not declare or pay any dividend on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
shares of Enterprise's capital stock (i) during an Extension Period, (ii) if
there has occurred and is continuing any event that is, or, with the giving of
notice or the lapse of time or both would constitute, a Debenture Event of
Default or (iii) if Enterprise is in default with respect to its payment or
other obligations under any Guarantee. See " -- Debenture Events of Default" and
"Description of the Guarantee -- Guarantee Events of Default."
Any waiver of any Debenture Event of Default will require the approval of
at least a majority of the aggregate principal amount of the corresponding
series of Debentures or, if such Debentures are held by an Issuer, the approval
of at least a majority in aggregate liquidation amount of the Preferred
Securities of such Issuer; provided, however, that a Debenture Event of Default
resulting from the failure to pay the principal of, premium, if any, or interest
on, such Debentures may not be waived.
MODIFICATION OF THE INDENTURE
From time to time, Enterprise and the Debenture Trustee, without notice to
or the consent of any holders of Debentures, may amend or supplement the
Indenture for any of the following purposes: (i) to cure any ambiguity, defect
or inconsistency; (ii) to comply with the provisions of the Indenture regarding
consolidation, merger or sale, conveyance, transfer or lease of the properties
as an entirety or substantially as an entirety of Enterprise; (iii) to provide
for uncertificated Debentures in addition to or in place of certificated
Debentures; (iv) to make any other change that does not in the reasonable
judgment of Enterprise adversely affect the rights of any holder of the
Debentures; (v) to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the Trust Indenture Act; or (vi) to set
forth the terms and conditions, which shall not be inconsistent with the
Indenture, of any series of Debentures and the form of Debentures of such
series.
In addition, Enterprise and the Debenture Trustee may modify the Indenture
or any supplemental indenture or waive future compliance by Enterprise with the
provisions of the Indenture, with the consent of the holders of at least a
majority of the aggregate principal amount of the Debentures of each series
affected thereby, provided that no such modification, without the consent of
each holder of such Debentures, may (i) reduce the principal amount of such
Debentures, (ii) reduce the
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principal amount of outstanding Debentures of any series the holders of which
must consent to an amendment of the Indenture or a waiver, (iii) change the
stated maturity of the principal of, or interest on, or the rate of interest on,
such Debentures, (iv) change the redemption provisions applicable to such
Debentures adversely to the holders thereof, (v) impair the right to institute
suit for the enforcement of any payment with respect to such Debentures, (vi)
change the currency in which payments with respect to such Debentures are to be
made, or (vii) change the subordination provisions applicable to such Debentures
adversely to the holders thereof, provided that if such Debentures are held by
an Issuer, no modification shall be made that adversely affects the holders of
the Preferred Securities of such Issuer, and no waiver of any Debenture Event of
Default with respect to such Debentures or compliance with any covenant under
the Indenture shall be effective, without the prior consent of the holders of at
least a majority of the aggregate liquidation amount of the Preferred Securities
of such Issuer or the holder of each such Preferred Security, as applicable.
DEBENTURE EVENTS OF DEFAULT
The following are "Debenture Events of Default" with respect to the
Debentures of any series: (i) default for 30 days in payment of any interest on
any Debenture of that series (other than the payment of interest during an
Extension Period); (ii) default in payment of principal of or premium, if any,
on any Debenture of that series when the same becomes due and payable; (iii)
default for 60 days after receipt by Enterprise of a "Notice of Default" in the
performance of or failure to comply with any other covenant or agreement for
such series of Debentures or in the Indenture or any supplemental indenture
under which such series of Debentures may have been issued or (iv) certain
events of bankruptcy, insolvency or reorganization of Enterprise. In case a
Debenture Event of Default has occurred and is continuing, other than one
relating to bankruptcy, insolvency or reorganization of Enterprise, in which
case the principal of, premium, if any, and any interest on, all of the
Debentures of the applicable series shall become immediately due and payable,
the Debenture Trustee or the holders of at least 25% in aggregate principal
amount of the Debentures of that series may declare the principal, together with
interest accrued thereon, of all the Debentures of that series to be due and
payable; provided, however, that if a Debenture Event of Default has occurred
and is continuing with respect to such Debentures and the Debenture Trustee or
the holders of at least 25% in aggregate principal amount of such series of
Debentures fail to declare the principal of such series of Debentures to be
immediately due and payable, then, if such Debentures are held by an Issuer, the
holders of at least 25% in aggregate liquidation amount of the corresponding
Preferred Securities shall have such right by written notice to Enterprise and
the Debenture Trustee. The holders of at least a majority in aggregate principal
amount of such series of Debentures, by notice to the Debenture Trustee, may
rescind an acceleration, provided that if the principal of such Debentures has
been declared due and payable by the holders of the corresponding Preferred
Securities, no rescission of such acceleration will be effective unless
consented to by the holders of at least a majority in aggregate liquidation
amount of the corresponding Preferred Securities.
Enterprise will be required to furnish to the Debenture Trustee annually a
statement as to the compliance by Enterprise with all conditions and covenants
under the Indenture and the Debentures and as to any Debenture Event of Default.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Enterprise may not consolidate with or merge with or into any other person
or sell, convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to any person, unless (i) the successor person
shall be organized and existing under the laws of the United States or any state
thereof or the District of Columbia and shall expressly assume by a supplemental
indenture all of the obligations of Enterprise under the Debentures and the
Indenture; (ii) immediately after giving effect to such transaction, no
Debenture Event of Default, and no event which after notice or lapse of time or
both would become a Debenture Event of Default, has occurred and is continuing;
and (iii) certain other conditions prescribed in the Indenture are met.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, Enterprise will be discharged from any
and all obligations in respect of the Debentures of any series if Enterprise
deposits with the Debenture Trustee, in trust, (i) cash and/or (ii) United
States Government Obligations (as defined in the Indenture), which through the
payment of interest thereon and principal thereof in accordance with their terms
will provide cash in an amount sufficient to pay all the principal of, premium,
if any, and interest on, the Debentures of such series on the dates such
payments are due in accordance with the terms of such Debentures.
15
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INFORMATION CONCERNING THE DEBENTURE TRUSTEE
Subject to the provisions of the Indenture relating to its duties, the
Debenture Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture at the request, order or direction of the holders of
any series of Debentures or the holders of the corresponding Preferred
Securities, unless such holders shall have offered to the Debenture Trustee
reasonable security and indemnity. Subject to such provision for
indemnification, the holders of at least a majority in aggregate principal
amount of any series of Debentures affected or the holders of at least a
majority in aggregate liquidation amount of the corresponding Preferred
Securities (with each such series voting as a class), as applicable, will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Debenture Trustee with respect to such series of
Debentures or exercising any trust or power conferred on the Debenture Trustee.
The Indenture will contain limitations on the right of the Debenture
Trustee, as a creditor of Enterprise, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. In addition, the Debenture Trustee may be deemed to
have a conflicting interest and may be required to resign as Debenture Trustee
if at the time of a Debenture Event of Default (i) it is a creditor of
Enterprise or (ii) there is a default under the indenture(s) referred to below.
First Union National Bank is the Trustee under PSE&G's Indenture dated
August 1, 1924, with respect to PSE&G's First and Refunding Mortgage Bonds and
on various indentures relating to PSE&G. Enterprise and its subsidiaries
maintain other normal banking relationships with First Union National Bank.
GOVERNING LAW
The Indenture will be governed by and construed in accordance with the laws
of the State of New Jersey.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEE
Payments of Distributions and redemption and liquidation payments due on a
series of Preferred Securities (to the extent the Issuer thereof has funds
available for such payments) will be guaranteed by Enterprise as and to the
extent set forth under "Description of the Guarantee." No single document
executed by Enterprise in connection with the issuance of a series of Preferred
Securities will provide for Enterprise's full, irrevocable and unconditional
guarantee of the Preferred Securities. It is only the combined operation of
Enterprise's obligations under the applicable Guarantee, the applicable Trust
Agreement, the corresponding series of Debentures and the Indenture that has the
effect of providing a full, irrevocable and unconditional guarantee of an
Issuer's obligations under its Preferred Securities.
A holder of any corresponding Preferred Security may institute a legal
proceeding directly against Enterprise to enforce its rights under such
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related Issuer or any other person or entity.
As long as Enterprise makes payments of interest and other payments when
due on a series of Debentures, such payments will be sufficient to cover the
payment of Distributions and redemption and Liquidation Distributions due on the
corresponding Preferred Securities, primarily because (i) the aggregate
principal amount of such series of Debentures will be equal to the sum of the
aggregate liquidation amount of the corresponding Preferred Securities and
Common Securities, (ii) the interest rate and interest and other payment dates
on such series of Debentures will match the Distribution rate and Distribution
and other payment dates for the corresponding Preferred Securities, (iii) the
applicable Trust Agreement provides that Enterprise shall pay for all and any
costs, expenses and liabilities of the Issuer of such Preferred Securities
except such Issuer's obligations under such Preferred Securities, and (iv) the
applicable Trust Agreements provide that no Issuer will engage in any activity
that is not consistent with the limited purposes of such Issuer. If and to the
extent that Enterprise does not make payments on any series of Debentures, such
Issuer will not have funds available to make payments of Distributions or other
amounts due on the corresponding Preferred Securities.
A principal difference between the rights of a holder of a Preferred
Security (which represents an undivided beneficial interest in the assets of the
Issuer thereof) and a holder of a Debenture is that a holder of a Debenture will
accrue, and (subject to the permissible extension of the interest payment
period) is entitled to receive, interest on the principal amount of Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions only if and to the extent such Issuer has funds available for the
payment of such Distributions.
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<PAGE>
Upon any voluntary or involuntary dissolution or liquidation of any Issuer
not involving a distribution of any series of Debentures, after satisfaction of
liabilities to creditors of such Issuer, the holders of the corresponding
Preferred Securities will be entitled to receive, out of assets held by such
Issuer, the Liquidation Distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution." Upon any voluntary
liquidation or bankruptcy of Enterprise, each Issuer, as holder of the
Debentures, would be a creditor of Enterprise, subordinated in right of payment
to all Senior Indebtedness, but entitled to receive payment in full of
principal, premium, if any, and interest, before any stockholders of Enterprise
receive payments or distributions. Since Enterprise will be the guarantor under
each Guarantee and has agreed to pay for all costs, expenses and liabilities of
each Issuer (other than an Issuer's obligations to the holders of its Preferred
Securities), the positions of a holder of such Preferred Securities and a holder
of such Debentures relative to other creditors and to stockholders of Enterprise
in the event of liquidation or bankruptcy of Enterprise would be substantially
the same.
A default or event of default under any Senior Indebtedness would not
constitute a Debenture Event of Default. However, in the event of payment
defaults under, or acceleration of, Senior Indebtedness, the subordination
provisions of the Debentures provide that no payments may be made in respect of
the Debentures until such Senior Indebtedness has been paid in full or any
payment default thereunder has been cured or waived. Failure to make required
payments on any series of Debentures would constitute a Debenture Event of
Default.
PROPOSED TAX LAW CHANGES
From time to time, the Clinton Administration has proposed certain tax law
changes that would, among other things, generally deny interest deductions to a
corporate issuer if the debt instrument has a term exceeding 20 years and is not
reflected as indebtedness on such issuer's consolidated balance sheet. The term
of each series of Debentures may vary and may exceed 20 years. Enterprise cannot
predict what effect, if any, a proposal of the sort discussed above will have on
any series of Debentures; however, if any such proposal were to become effective
retroactively, Enterprise would be precluded from deducting interest paid on
such Debentures which might, depending on the specific terms of such Debentures
and the corresponding series of Preferred Securities, give rise to the right of
Enterprise to redeem such Debentures and thereby cause a mandatory redemption of
the corresponding series of Preferred Securities. Federal income tax information
and consequences and redemption provisions, if any, relating to each series of
Debentures and corresponding series of Preferred Securities will be discussed as
applicable in the accompanying Prospectus Supplement.
PLAN OF DISTRIBUTION
The Issuers may offer or sell Preferred Securities offered hereby to one or
more underwriters for public offering and sale by them. The Issuers may sell
Preferred Securities as soon as practicable after effectiveness of the
Registration Statement. Any such underwriter involved in the offer and sale of
the Preferred Securities will be named in an accompanying Prospectus Supplement.
Underwriters may offer and sell the Preferred Securities at a fixed price
or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices relating to such prevailing market
prices or at negotiated prices. In connection with the sale of Preferred
Securities, underwriters may be deemed to have received compensation from
Enterprise in the form of underwriting discounts or commissions and may also
receive commissions. Underwriters may sell Preferred Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from such underwriters.
Any underwriting compensation paid by Enterprise on behalf of the Issuers
to underwriters in connection with the offering of Preferred Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in an accompanying Prospectus Supplement.
Underwriters and dealers participating in the distribution of the Preferred
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Preferred
Securities may be deemed to be underwriting discounts and commissions, under the
Securities Act of 1933, as amended (the "Securities Act"). Underwriters and
dealers may be entitled, under agreement with Enterprise and the Issuers, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by
Enterprise for certain expenses.
Underwriters and dealers may engage in transactions with, or perform
services for, Enterprise and/or any of its affiliates in the ordinary course of
business.
17
<PAGE>
Each series of Preferred Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Preferred
Securities are sold by the Issuers for public offering and sale may make a
market in such Preferred Securities but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. The
Preferred Securities may or may not be listed on a national securities exchange.
No assurance can be given as to the liquidity of or the existence of trading
markets for any Preferred Securities.
LEGAL MATTERS
Certain legal matters will be passed upon for Enterprise by R. Edwin
Selover, Esquire, Vice President and General Counsel of Enterprise or James T.
Foran, Esquire, Associate General Counsel of Enterprise and by Ballard Spahr
Andrews & Ingersoll, Philadelphia, Pennsylvania, special tax counsel to
Enterprise and the Issuers, and by Richards, Layton & Finger, P.A., special
Delaware counsel to Enterprise and the Issuers, and for the underwriters by
Brown & Wood LLP, New York, New York, who may rely on the opinion of Mr. Selover
or Mr. Foran as to matters of New Jersey law. R. Edwin Selover, Esquire or James
T. Foran, Esquire and Brown & Wood LLP may rely on the opinion of Ballard Spahr
Andrews & Ingersoll as to matters of Pennsylvania law and on the opinion of
Richards, Layton & Finger, P.A. as to matters of Delaware law. Messrs. Selover
and Foran are employees of PSE&G.
EXPERTS
The consolidated financial statements and the related financial statement
schedules of Enterprise, incorporated in this Prospectus by reference from
Enterprise's Annual Report on Form 10-K for the year ended December 31, 1996,
have been audited by Deloitte & Touche, LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
18
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
ENTERPRISE SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Risk Factors......................................... S-3
Enterprise Capital Trust I........................... S-5
Public Service Enterprise Group Incorporated......... S-6
Use of Proceeds...................................... S-6
Capitalization....................................... S-7
Certain Terms of the Series A Preferred Securities... S-7
Certain Terms of the Series A Debentures............. S-9
United States Taxation............................... S-10
Underwriting......................................... S-12
<CAPTION>
PROSPECTUS
<S> <C>
Statement of Available Information................... 2
Incorporation of Certain Documents by Reference...... 2
The Issuers.......................................... 2
Public Service Enterprise Group Incorporated......... 3
Use of Proceeds...................................... 3
Description of the Preferred Securities.............. 3
Description of the Guarantee......................... 11
Description of the Debentures........................ 12
Relationship among the Preferred Securities, the
Debentures and the Guarantee....................... 16
Proposed Tax Law Changes............................. 17
Plan of Distribution................................. 17
Legal Matters........................................ 18
Experts.............................................. 18
</TABLE>
9,000,000 PREFERRED SECURITIES
ENTERPRISE CAPITAL TRUST I
7.44% TRUST ORIGINATED
PREFERRED SECURITIESSM
("TOPRSSM"), SERIES A
GUARANTEED TO THE EXTENT
ENTERPRISE CAPITAL TRUST I
HAS AVAILABLE FUNDS
AS SET FORTH HEREIN BY
PUBLIC SERVICE ENTERPRISE
GROUP INCORPORATED
(PSEG logo appears here.)
---------------------------------
PROSPECTUS SUPPLEMENT
---------------------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
A.G. EDWARDS & SONS, INC.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
JANUARY 14, 1998
============================================================
