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Registration No. 33-53211
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Post-Effective Amendment No. 1
to
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CONNECTICUT WATER SERVICE, INC.
(Exact name of registrant as specified in its charter)
State of Connecticut 06-0739839
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
93 West Main Street, Clinton, Connecticut 06413
(203) 669-8636
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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DAVID C. BENOIT
Vice President - Finance
93 West Main Street
Clinton, Connecticut 06413
(203) 669-8636
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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It is also respectfully requested that the Commission send copies of
all notices, orders and communications to:
MICHAEL F. HALLORAN, Esq.
Day, Berry & Howard
CityPlace
Hartford, Connecticut 06103
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Approximate date of commencement of proposed sale to the public: From time to
time following the effective date of this Registration Statement.
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If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. [ ]
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [X]
Pursuant to Rule 429 of the Commission under the Securities
Act of 1933, the Prospectus filed as a part of this Registration
Statement relates to shares of Common Stock of the Company covered by
Registration Statements Nos. 2-74938, 2-92822, 2-97468 and 33-6187 for
issue under the Company's Dividend Reinvestment and Common Stock
Purchase Plan.
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CROSS-REFERENCE SHEET
FORM S-3 ITEM NO. AND CAPTION PROSPECTUS CAPTION OR LOCATION
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1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus Inside Front Cover Page and Outside Back
Cover Page
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges Not Applicable
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Description of the Plan
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Description of the Plan
9. Description of Securities to be
Registered Documents Incorporated by Reference
10. Interests of Named Experts and
Counsel Not Applicable
11. Material Changes Not Applicable
12. Incorporation of Certain Information
by Reference Documents Incorporated by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities Part II, Item 17
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PROSPECTUS
[LOGO]
CONNECTICUT WATER SERVICE, INC.
DIVIDEND REINVESTMENT AND
COMMON STOCK PURCHASE PLAN
The Dividend Reinvestment and Common Stock Purchase Plan (the "Plan") of
Connecticut Water Service, Inc. (the "Company") provides the Company's
stockholders, and customers and employees of the Company's subsidiary, The
Connecticut Water Company ("CWC") who reside in Connecticut, with
AUTOMATIC DIVIDEND REINVESTMENT
of all or a percentage of dividends on Common Stock of the Company in additional
Common Stock and
INVESTMENT OF OPTIONAL CASH PAYMENTS
of an aggregate from $25 to $1,000 per month in Common Stock of the Company.
Participants pay NO brokerage commission or service charge upon the
purchase of shares.
Shares of Common Stock may be purchased by the Agent for the Plan in the
open market, in privately negotiated transactions or from the Company. The
purchase price for any originally-issued shares purchased from the Company for
participants in the Plan will be the average closing price of the Company's
Common Stock in the over-the-counter market as reported by the National
Association of Securities Dealers Automated Quotations (NASDAQ) National Market
System on the last five trading days ending with, and including, the Investment
Date (as defined herein). The purchase price of any Common Stock purchased on
the open market or in privately negotiated transactions will be the weighted
average price of all such shares of Common Stock purchased by the Agent with
respect to an Investment Date.
Participants may also deposit stock certificates with the Plan's Agent
for safekeeping.
This Prospectus relates to authorized shares of Common Stock of the
Company registered for purchase under the Plan. It is suggested that this
Prospectus be retained for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is August 15, 1996
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports and other
information with the Securities and Exchange Commission. Certain information
concerning the Company's directors and officers and their remuneration, the
principal holders of securities of the Company and with respect to interests of
management and others in transactions with the Company, has been disclosed in
proxy statements distributed to stockholders of the Company and filed with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices in Chicago (Northwestern Atrium Center, Suite
1400, 500 West Madison Street, Chicago, IL 60661) and New York (Public Reference
Room, 13th Floor, 7 World Trade Center, New York, NY 10048). Copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site (http://www.sec.gov.) that contains
reports, proxy and information statements and other information regarding the
Company.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents heretofore filed with the Securities and Exchange Commission:
1. The Company's Annual Report for the year ended December 31, 1995
on Form 10-K filed on March 12, 1996 pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (the "1934 Act");
2. The Company's Quarterly Report for the quarter ended June 30, 1996
on Form 10-Q filed on August 12, 1996 pursuant to Section 13(a) or
15(d) of the 1934 Act since the end of the fiscal year covered by
the Annual Report referred to in 1. above;
3. All other reports filed pursuant to Section 13(a) or 15(d) of the
1934 Act since the end of the fiscal year covered by the Annual
Report referred to in 1. above; and
4. The description of the Company's Capital Stock contained in the
Company's Registration Statement No. 33-36794 on Form S-2 filed
under the Securities Act of 1933.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the additional shares of Common Stock offered by
this Prospectus shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any more recent incorporated
document modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The information relating to the Company contained in this Prospectus
summarizes, is based upon, or refers to, information and financial statements
contained in one or more of the documents incorporated by reference herein;
accordingly, such information contained herein is qualified in its entirety by
reference to such documents and should be read in conjunction therewith.
The Company hereby undertakes to provide without charge to each stockholder
to whom a copy of the Prospectus has been delivered, on the request of any such
person, a copy of any or all of the documents described above which are or may
be incorporated in this Prospectus by reference, other than exhibits to such
documents. Requests for such copies should be directed to the attention of
Corporate Secretary, Connecticut Water Service, Inc., 93 West Main Street,
Clinton, Connecticut, 06413, telephone 1-888-CWS-STOK, Extension 342.
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THE COMPANY
Connecticut Water Service, Inc. (the "Company") is the parent company of
The Connecticut Water Company ("CWC") which provides water for residential,
commercial, industrial, municipal and fire protection purposes in various areas
in the State of Connecticut through three operating regions. The Company and CWC
represent the second largest investor-owned water system in Connecticut in terms
of operating revenue and utility plant investment.
The Company was organized in 1956 as Suburban Water Service, Inc. and has
engaged in the business of acquiring and operating water companies through
controlling stock ownership. In 1975, the Company changed its name to
Connecticut Water Service, Inc., after acquiring all of the outstanding common
stock of CWC. The Company is a non-operating company substantially all of whose
income is derived from the earnings on the common stock of CWC. CWC's debt and
preferred stock are held primarily by institutional investors.
The Company's future ability to pay dividends on the Common Stock is
dependent upon the continued ability of CWC to pay dividends to the Company. The
profitability of the operations of the water utility industry generally and of
CWC (and hence the Company) is largely dependent on the timeliness and adequacy
of rate relief allowed by utility regulatory commissions. In addition,
profitability is dependent on numerous factors over which CWC has little or no
control, such as the quantity of rainfall and temperature in a given period of
time, industrial demand, prevailing rates of interest for short and long-term
borrowings, energy rates, and compliance with environmental and water quality
regulations. In addition, inflation and other factors beyond the Company's or
CWC's control impact on the costs of construction, materials and employee costs.
See "Rates," "Financing" and "Regulation" under "Item 1. Business" in the
Company's latest Annual Report on Form 10-K filed pursuant to Section 13(a) of
the 1934 Act.
The Company's principal office is located at 93 West Main Street, Clinton,
Connecticut 06413 and its telephone is 1-860-669-8636.
DESCRIPTION OF THE PLAN
The following description of the terms and conditions of the Plan is set
forth for your convenience in a question and answer form.
PURPOSE
1. What is the purpose of the Plan?
The Plan provides holders of record of the Company's Common Stock ("Common
Stock") and employees and customers of CWC who reside in Connecticut with a
simple and convenient method of purchasing shares of Common Stock and either
investing cash dividends, or investing cash dividends and optional cash
payments, in additional shares of Common Stock without payment of any brokerage
commission. Participants may also deposit stock certificates with the Plan's
Agent for safekeeping.
FEATURES
2. What are the features of the Plan?
A stockholder or customer who participates in the Plan (a "Participant")
will obtain the following advantages:
(a) Participants may have all or a percentage (50% or any higher even
multiple of 10%) of their cash dividends on shares of Common Stock
registered in their name and all cash dividends on shares credited to their
Plan account automatically reinvested in Common Stock at 100% of the market
price as more fully explained under Question 12.
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(b) Participants may, in addition, invest monthly in additional shares
of Common Stock by making optional cash payments of at least $25 and not
exceeding $1,000 per month. The purchase price of the shares purchased with
optional cash payments pursuant to the Plan will be 100% of such market
price. Optional cash payments may be made by check, money order, wire
transfer or automatic account withdrawal.
(c) Residential customers of CWC, including all members of households
served by CWC, and full-time employees of CWC residing in Connecticut who
do not presently own shares of Common Stock may become Participants by
making an initial cash investment of at least $25 to purchase shares under
the Plan.
(d) A Participant will pay no brokerage commissions or service charges
in connection with purchases under the Plan.
(e) A Participant's funds will be fully invested because the Plan
permits fractions of shares to be credited to a Participant's account.
Dividends on such fractions will be reinvested in additional shares or
fractions thereof and such shares credited to a Participant's account.
(f) Since the Agent that administers the Plan holds and acts as
custodian of shares purchased under the Plan, a Participant may also elect
to deposit certificates for shares of Common Stock held in his or her name
with the Agent. This relieves a Participant of the responsibility for the
safekeeping of certificates and protects such Participant against loss,
theft or destruction of such certificates.
(g) Regular statements of account will provide Participants with a
record of each transaction to simplify recordkeeping.
(h) A Participant may choose to establish an Individual Retirement
Account ("IRA") through a custodian (see Question 25) and to contribute or
roll over amounts to the IRA through a Plan account.
See Question 10 for a discussion of the disadvantages and risks relating to
the Plan.
ADMINISTRATION
3. Who administers the Plan for Participants?
The State Street Bank and Trust Company (the "Agent") has been designated
by the Company as the agent to administer the Plan as Agent for Participants, to
purchase and hold shares of Common Stock acquired through the Plan, to maintain
records, to send statements of account to Participants and to perform other
duties relating to the Plan. The Company and the Agent are not affiliated.
Shares purchased for a Participant will be held by or through the Agent
until termination of participation in the Plan or until a written request is
received from the Participant for withdrawal of all or part of such
Participant's shares. Shares purchased under the Plan and held by the Agent will
be registered in its name or the name of one of its nominees. The Company may
replace the Agent at any time. In the event that the Agent should cease to
administer the Plan, the Company will make such other arrangements as it deems
appropriate for the administration of the Plan.
All correspondence concerning the Plan should be addressed to the Agent as
follows:
THE STATE STREET BANK AND TRUST COMPANY
DIVIDEND REINVESTMENT DEPARTMENT
P.O. BOX 8200
BOSTON, MASSACHUSETTS 02266-8200
TELEPHONE NO. 1-800-426-5523
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ELIGIBILITY
4. Who is eligible to participate?
(a) Stockholders. All holders of record of shares of Common Stock
are entitled to participate in the Plan. In order to be
eligible to participate, beneficial owners of Common Stock
whose shares are registered in names other than their own
(e.g., broker or bank nominees) must become stockholders of
record by having their shares transferred into their names.
(b) Customers. All residential customers of CWC are eligible to
participate in the Plan, as well as all members of households
served by CWC. Water consumers in the franchise territory
served by CWC who are not customers, such as renters and
condominium owners, may participate in the Plan, except that
groups of individuals such as tenant associations are not
eligible to participate. All customer Participants must reside
in Connecticut. Business customers of CWC are not eligible to
participate. Customers who are eligible to participate in the
Plan are herein referred to as "Customers".
(c) Employees. All full-time employees of CWC (referred to herein
as "Employees") are eligible to participate in the Plan.
A Customer or Employee may enroll under the Plan in his or her own
name, in the joint name of the Customer or Employee and another person, or in
his or her name as custodian or trustee for another person, by marking the
Dividend Reinvestment and Common Stock Purchase Plan Authorization Form (the
"Authorization Form") in the appropriate manner. In certain cases, Customers and
Employees may also enroll under the Plan in the name of the trustee of an IRA
for the benefit of the Customer or Employee. (See Question 25).
PARTICIPATION
5. How does an eligible stockholder, Customer or Employee participate?
A stockholder of record or Customer or Employee may join the Plan at any
time by completing and signing an Authorization Form and returning it to the
Agent. Authorization Forms will be provided from time to time to all
non-participating stockholders and Customers and Employees and may also be
obtained at any time by telephone or written request to the Agent or to the
Secretary of the Company.
A Customer or Employee need not be a registered holder of Common Stock but,
by executing the Authorization Form, agrees to have at least $25 of Common Stock
purchased on his or her behalf as of the Investment Date (as defined under
Question 6) said Participant is enrolled in the Plan, at a price equal to 100%
of the applicable market price, and must acknowledge that he or she is a
Connecticut resident. Each Authorization Form for a Customer who is not a
registered stockholder must be accompanied by a check for at least $25. A
stockholder account will be opened by the Agent for Customers and Employees who
become new stockholders as a result of their purchase of Common Stock under the
Plan. The account will be opened in accordance with the instruction of the
Customer or Employee on the Authorization Form.
A Participant must furnish his or her Federal tax identification number to
the Agent when opening a Plan Account. Where the Common Stock is registered in
more than one name (i.e., joint tenants, trustees, etc.), all registered holders
must sign the Authorization Form. All joint accounts will be "Joint Tenants"
unless otherwise instructed by the Customer or Employee. A person returning a
signed Authorization Form, and who wishes partial reinvestment, must check the
"Partial Automatic Dividend Reinvestment" box and indicate the percentage (50%
or any higher even multiple of 10%) of dividends on shares registered in the
Participant's name which the Participant wishes to reinvest; otherwise, all
dividends on shares registered in the Participant's name will be reinvested. A
Participant automatically continues in the Plan unless he or she notifies the
Agent in writing or by telephone that he or she wishes to withdraw. (See
Question 29). A Participant who ceases to be a Customer or Employee of CWC may
continue to participate in the Plan as long as at least one whole share of
Common Stock is registered in the Participant's name or held through the Plan.
See Question 32 for information concerning
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termination by the Company of participation by a Participant. CURRENT
PARTICIPANTS DO NOT NEED TO COMPLETE AND RETURN A NEW AUTHORIZATION FORM UNLESS
THEY WISH TO CHANGE THEIR METHOD OF PARTICIPATION.
6. When may a stockholder, Customer or Employee join the Plan?
If the Authorization Form is received prior to the record date for
determining the holders of Common Stock entitled to the next dividend, the
Participant will be enrolled as of the next dividend payment date and
reinvestment of dividends will commence with the next dividend. The record dates
for dividends are normally on or around the 1st day of March, June, September
and December and the dividend payment dates are normally on the 15th day of said
months.
The "Investment Date" with respect to reinvestment of dividends will
normally be the dividend payment date. The "Investment Date" with respect to
purchases of additional shares of Common Stock with funds provided by optional
cash payments will be the "Optional Cash Investment Date" which will normally be
the second day of each month. If such a day falls on a Saturday, Sunday or other
day on which the New York Stock Exchange is closed, or on which trading is
suspended, the Investment Date (and when applicable the dividend payment date)
will normally be the next trading day.
If the Authorization Form is received by the Agent after the record date
for the next dividend, the Participant's enrollment will not start until the
second succeeding dividend payment date. For example, in order to invest the
quarterly dividend expected to be payable on March 15 to stockholders of record
on March l, or to have optional cash payments received with an Authorization
Form invested on or around April 2, a Participant's Authorization Form must be
received by the Agent no later than March l. If the Authorization Form is
received after March 1, the dividend payable on March l5 will be paid in cash
and the Participant's reinvestment of dividends will commence with the next
dividend payment date (expected to be June 15).
Optional cash payments may be made when enrolling by enclosing with the
Authorization Form a check payable to The State Street Bank and Trust Company.
(See Questions 14 and 15).
Initial investments, for Customers or Employees who do not already own
Common Stock, must be at least $25, in the form of a personal check or money
order, and must be included with the completed Authorization Form returned to
the Agent.
7. What does the Authorization Form provide?
The Authorization Form permits a Participant, by checking the "Full
Dividend Reinvestment" box, to direct the Agent to invest in additional shares
of Common Stock all of the cash dividends on the shares registered in his or her
own name, as well as all dividends on shares credited to his or her account
under the Plan, and to invest optional cash payments (from $25 to $1,000 per
month), if any, which the Participant chooses to make. Alternatively, if the
"Partial Dividend Reinvestment" box on the Authorization Form is checked, a
percentage of dividends, indicated by the Participant on the Authorization Form
(50%, 60%, 70%, 80% or 90%), on shares registered in the Participant's name will
be invested in additional shares of Common Stock, as well as all dividends on
shares credited to the Participant's account and optional cash payments (of at
least $25 and not exceeding $1,000 per month), if any. A Customer or Employee
must direct the Agent to purchase shares of Common Stock with the minimum
initial investment enclosed with the Authorization Form. Customers or Employees
may also select the full or partial reinvestment option. A stockholder, Customer
or Employee may not participate in the Plan solely with respect to optional cash
payments. At least 50% of dividends on shares registered in the Participant's
name and all dividends on shares credited to a Participant's account must be
reinvested under the Plan.
Once a Participant elects reinvestment, cash dividends paid on shares of
Common Stock registered in such Participant's name or held in such Participant's
account will be reinvested in additional shares of Common Stock. If a
Participant specifies partial reinvestment, that portion of such dividend
payment not being reinvested will be sent to such Participant by check in the
usual manner or, if the Participant elects the direct dividend deposit option, a
deposit will be transmitted electronically to the Participant's bank account on
the same day dividends are paid. Participants may elect the direct dividend
deposit option by completing and signing a Direct Dividend Deposit Form
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and returning it to the Agent with the information requested by the Form. In
order for the direct dividend deposit to be effective as to any dividend payment
date, the Form must be received by the Agent at least 30 days prior to the
dividend payment date. Direct dividend deposits may be terminated at any time by
the Participant by written or telephone notice to the Agent. Any such request
must be made on or before the 5th day of the applicable month (March, June,
September or December) to be effective as to that dividend payment date.
Participants may contact the Agent at 1-800-426-5523 to obtain a Direct
Dividend Deposit Form.
A participant may elect to deposit certificates with the Agent for
safekeeping and may elect to reinvest dividends on all or a portion of such
shares or to receive dividends in cash. (See Question 20).
No matter which of the above options is chosen, ALL shares purchased under
the Plan and held in the Plan account will be subject to automatic dividend
reinvestment and the dividends on all such shares will automatically be
reinvested in Common Stock at a price equal to 100% of the applicable market
price.
8. May a Participant change the method of participation after enrollment?
Yes. If a Participant after enrollment wishes to change his or her method
of participation, either an additional Authorization Form must be executed and
returned to the Agent as specified in Question 5 or the Participant must give
the Agent telephone notice of such change as specified in Question 9.
Participants who wish to change the percentage of dividends reinvested with
respect to shares registered in their names must also either execute and return
to the Agent an additional Authorization Form or give the Agent telephone notice
of such change. If a Participant changes the percentage of his or her dividends
that is to be reinvested with respect to shares registered in his or her name by
submitting a later-dated Authorization Form or telephone notice to the Agent,
the later-dated Authorization Form or telephone notice must be received prior to
the record date for the next dividend in order for the later-dated Authorization
Form or telephone notice to take effect as of the next dividend payment date. If
the later-dated Authorization Form or telephone notice is received after the
record date for the next dividend, the percentage of such dividends reinvested
on the next dividend payment date will be the percentage indicated on the
original Authorization Form.
9. How may Participants give notice to the Agent by telephone?
Telephone notice may be given by calling the Agent at 1-800-426-5523.
Please be prepared with the Company's name, your Plan account number and your
Social Security number.
10. Does participation in the Plan involve any risk?
The risk to stockholders, Customers and Employees who participate in the
Plan is the same as with any other investment in shares of Common Stock of the
Company. It should be recognized that a Participant, Customer or Employee who
purchases Common Stock under the Plan loses any advantage otherwise available
from being able to select the timing of his or her investment. It should also be
recognized that, like any investment, the Company cannot assure the Participant,
Customer or Employee of a profit or protect the Participant, Customer or
Employee against a loss on the shares purchased under the Plan.
THE PARTICIPANT SHOULD RECOGNIZE THAT THE COMPANY CANNOT ASSURE HIM OR HER
OF A PROFIT OR PROTECT HIM OR HER AGAINST A LOSS ON THE SHARES PURCHASED OR SOLD
UNDER THE PLAN.
The Plan does not represent a change in the Company's dividend policy or a
guarantee of future dividends.
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PURCHASES
11. How are shares of Common Stock acquired under the Plan?
The Company has the option to issue new Common Stock or direct the Agent to
purchase Common Stock on any securities exchange where the shares are traded or
in privately negotiated transactions on terms relating to price, delivery, etc.
as may be agreed to by the Agent. If Common Stock is purchased on the open
market, neither the Participants nor the Company will have the authority or
power to direct the time or price at which shares may be purchased or the
selection of the broker or dealer through or from whom such purchases will be
made. The Company may not change its determination that shares of Common Stock
will be purchased directly from the Company or on the open market more than once
in any three-month period, except that if the Company has determined that shares
of Common Stock are to be purchased on the open market and if the broker or
dealer through or from whom such purchases are to be made determines in its sole
judgement that sufficient additional open-market purchases are not practicable
or could have a material impact on the market price of the Company's Common
Stock, said broker or dealer may request that the Company sell directly to the
Agent that number of newly-issued shares of Common Stock necessary to meet the
Plan's share purchase requirements for the applicable Investment Date. The
Company, in its sole discretion, shall decide whether or not to sell such
newly-issued shares to the Agent. If the Company determines not to issue new
shares of Common Stock under the Plan and applicable law or the closing of the
securities markets requires temporary curtailment or suspension of open-market
purchases of shares of Common Stock, the Agent is not accountable for its
inability to make purchases at such time. If a sufficient number of shares of
Common Stock is not available for purchase for a period of 30 days, the Agent
will promptly mail to Participants a check for the amount of any unapplied funds
in their Plan accounts.
12. How many shares will be purchased for a Participant?
The number of shares to be purchased depends on the amount of the
Participant's dividend or optional cash payments, or both, and the price of the
Common Stock. The Participant's account will be credited with a number of
shares, including fractions computed to three decimal places, equal to the total
amount invested divided by the purchase price. Thus, the shares purchased for a
Participant under the Plan will be held separately from the shares of Common
Stock which the Participant purchases (or has previously purchased) outside the
Plan and holds in his or her own name. A Participant may not specify the number
of shares to be purchased or the price at which shares are to be purchased, or
otherwise seek to restrict or control purchases made pursuant to the Plan.
13. What will be the price of shares of Common Stock purchased under the
Plan?
The purchase price per share of Common Stock which the Agent purchases in
the open market or in privately negotiated transactions will be the weighted
average price of such Common Stock purchased by the Agent for the Plan with
respect to the relevant Investment Date (as defined under Question 6.)
The purchase price per share of any newly-issued shares of Common Stock
purchased directly from the Company through the Plan on any Investment Date will
be 100% of the fair market value of the shares as of the Investment Date, which
for this purpose will be the average closing price of the Company's Common Stock
in the over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotations (NASDAQ) National Market System on the
last five trading days ending with, and including, the Investment Date.
In the event that both open market purchases and original issue purchases
from the Company are made from dividends and/or optional cash payments, such
combination of shares will be allocated to each individual Participant's account
on a pro rata basis or otherwise in the discretion of the Company.
The Agent will make every effort to invest funds in Common Stock as soon as
practicable on or after each Investment Date. Shares acquired in the open market
or from private sources will be purchased as soon as practicable by the Agent
beginning on the relevant Investment Date and in no event later than 30 days
after the relevant Investment Date, except where and to the extent necessary
under any applicable federal securities laws or other government or stock
exchange regulations, and except that the Agent may institute purchase
transactions for
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the investment of dividends prior to the actual payment of dividends in order to
minimize, to the extent possible, the delay between the payment of dividends and
the settlement of purchase transactions.
The Company reserves the right in its sole discretion to refuse to make any
shares available for purchase under the Plan if such average market price is
less than the Company's equity per Common Stock (book value) as determined by
the Company from time to time. Shares acquired from the Company will be
purchased for Participants' accounts as of the close of business on the relevant
Investment Date. Dividend and voting rights will commence on settlement, which
is normally 3 business days after purchase, whether from the Company or any
other source.
OPTIONAL CASH PAYMENTS AND INITIAL INVESTMENTS
14. How do optional cash payments work?
On each Optional Cash Investment Date as defined under Question 6 (or as
soon as practicable thereafter) the Agent will apply all optional cash payments
received at least 5 business days prior to said Optional Cash Investment Date to
the purchase of additional shares of Common Stock, provided the Agent has not
received a written or telephone request from the Participant at least 48 hours
prior to such Optional Cash Investment Date to return all or any portion of such
optional cash payment. Each optional cash payment must be at least $25 and
optional cash payments may not exceed $1,000 in any month. Provisions applicable
to foreign Participants are set forth under Question 38.
The Company reserves the right to limit the number of shares of Common
Stock to be purchased through optional cash purchases and initial investments to
50,000 shares per year. All payments accompanying requests to purchase Common
Stock received through the close of business on the date the 50,000 annual share
limit is reached will be honored. All payments received after that time will be
returned. The Company reserves the right, in its sole discretion, to waive the
annual share limit and/or to reduce or increase such annual share limit. There
is no limit to the number of shares of Common Stock to be purchased with
reinvested dividends.
The Agent will also invest in additional shares of Common Stock, as of each
dividend payment date, all cash dividends on shares credited to a Participant's
account and all (or, if partial reinvestment is specified, a percentage equal to
50% or any higher even multiple of 10%) of the cash dividends on shares of
Common Stock held by such Participant.
15. How are optional cash payments and initial investments made?
More than one optional cash payment may be made in each month, but the
aggregate of such payments may not be more than $1,000 in any period between
Optional Cash Investment Dates. Any amount in excess of $1,000 will be returned
to the Participant. For purposes of this limitation, all Plan accounts under
common control or management will be aggregated and deemed to be one account.
The Agent will purchase as many whole shares and fractional shares (computed to
three decimal places) of Common Stock as can be purchased with the amount
submitted.
An optional cash payment may be made by a Participant and an initial
investment may be made by a Customer or Employee when enrolling by enclosing a
check or money order payable to The State Street Bank and Trust Company with the
Authorization Form. Thereafter, check or money order investments may be made
only through the use of cash payment forms which are attached to those
statements of account sent to Participants periodically by the Agent. See
Question 18 for alternative methods of making optional cash payments. The same
amount of money need not be invested each time and there is no obligation to
make any optional cash payments. However, each optional cash payment must be at
least $25.
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16. When will optional cash payments and initial investments received by
the Agent be invested?
a. OPTIONAL CASH PAYMENTS BY PARTICIPANTS WILL BE INVESTED AS OF THE
OPTIONAL CASH INVESTMENT DATE WHICH IS NORMALLY THE SECOND DAY OF THE
MONTH. If the second day of the month falls on a Saturday, Sunday or other
day on which the New York Stock Exchange is closed, or on which trading is
suspended, the Optional Cash Investment Date will normally be the next
trading day. Optional cash payments will be invested as of the next
Optional Cash Investment Date (or as soon as practicable thereafter) if the
payment is received by the Agent AT LEAST 5 BUSINESS DAYS PRIOR TO SAID
OPTIONAL CASH INVESTMENT DATE. Optional cash payments received after that
date will be held by the Agent until the next Optional Cash Investment
Date; provided, however, that the Agent will return any such optional cash
payments, in whole or in part if the amount remaining with the Agent is at
least $25, to the Participant if written or telephone request therefor is
received by the Agent no later than 48 hours prior to the next succeeding
Optional Cash Investment Date. A Participant desiring to make optional cash
purchases on an Optional Cash Investment Date may do so by wire transfer of
funds or automatic account withdrawal, or by check or money order made
payable to the Agent, for the amount he or she wishes to invest, in an
amount not less than $25 for any single investment or more than $1,000
during any period between Optional Cash Investment Dates. NO INTEREST WILL
BE CREDITED OR PAID ON PAYMENTS RECEIVED OR HELD BY THE AGENT UNDER THE
PLAN.
b. Initial investments received from Customers or Employees prior to
the record date for the next dividend will be invested on the next dividend
payment date. Initial Investments received after such record date will be
held by the Agent and not invested until the dividend payment date
following the next record date.
c. Optional cash payments received prior to the record date for the
next dividend payment date from holders of Common Stock who are not then
Participants will be invested as of the Optional Cash Investment Date
following the dividend payment date. Any said optional cash payments
received after said record date will similarly be held by the Agent and not
invested until the Investment Date following the second dividend payment
date after such record date.
NO INTEREST WILL BE PAID BY THE COMPANY OR THE AGENT ON OPTIONAL CASH
PAYMENTS OR INITIAL INVESTMENTS.
If a Participant, Customer or Employee submits funds to purchase stock and
then wishes to have it returned rather than invested, the Agent will not be
obligated to return such funds unless a written or telephone request that they
be returned is received at least 48 hours prior to the next applicable
Investment Date.
17. Will shares acquired through optional cash payments and initial
investments be subject to automatic dividend reinvestment?
Yes. All dividends paid on shares acquired through optional cash payments
and initial investments, so long as the shares are held in the Participant's
Plan account, will be automatically reinvested in shares of Common Stock. If
certificates for shares acquired through optional cash payments or initial
investment by Customers and Employees are issued to the Participant, the
dividends paid on such shares will continue to be reinvested unless the
Participant elects to have them paid in cash by submitting a new Authorization
Form to the Agent.
18. How can optional cash payments be made?
(a) Check or Money Order. Optional cash payments and initial
investments may be made by personal check or money order payable in U.S.
dollars to the Agent. Checks must be drawn against U.S. banks. Optional
cash payments must be mailed to the Agent at the address set forth in
Question 3 together with the cash payment form attached to a Participant's
statement of account. CASH PAYMENTS FORWARDED TO ANY OTHER ADDRESS DO NOT
CONSTITUTE VALID DELIVERY. Additional cash payment forms are available upon
request from the Agent.
In the event that any check is returned unpaid for any reason, the
Agent will consider the request for investment of such funds void and
without effect and will immediately remove from the Participant's account
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any shares purchased upon the prior credit of such funds. The Agent may
then sell such shares to satisfy any uncollected amounts. If the net
proceeds of the sale of such shares are insufficient to satisfy the balance
of the uncollected amounts, the Agent will be entitled to sell additional
shares from the Participant's account to satisfy the uncollected balance.
(b) Wire Transfers. Optional cash purchases may also be made by wire
transfer to the Agent. Wire transfers must include the name of the Plan,
the name in which the Plan account is registered and the Participant's Plan
account number. Participants making wire transfer purchases may be charged
fees by the commercial bank initiating the transfer. PARTICIPANTS MUST
CONTACT THE AGENT AT 1-800-426-5523 TO OBTAIN PROPER WIRE TRANSFER
INSTRUCTIONS.
(c) Automatic Deductions from a Bank Account. Optional monthly cash
purchases of a specified amount (not less than $25 nor more than $1,000 per
month) can be made automatically by electric funds transfer from a
predesignated U.S. bank account. The predesignated bank must be a member of
the Automated Clearing House (ACH) system in order to participate.
To initiate automatic monthly deductions, a Participant must complete and
sign an Automatic Deduction Form and return it to the Agent with the requested
information. Forms will be processed and will become effective as promptly as
practicable. To be effective with respect to a particular Optional Cash
Investment Date, completed forms must be received by the Agent at least 25 days
prior to that Optional Cash Investment Date. The Agent will make the necessary
arrangements with the Participant's bank to deduct the authorized amount on or
about 10 days prior to the Optional Cash Investment Date.
Once automatic monthly deductions commence, funds in the amount elected by
the Participant will be drawn from the Participant's designated bank account on
or about the tenth business day preceding the Optional Cash Investment Date and
will be invested in Common Stock beginning on that Optional Cash Investment
Date. A Participant will not be required to write any additional checks or mail
any additional forms.
Participants may change automatic monthly deductions by completing and
submitting to the Agent a new Automatic Deduction Form. Automatic monthly
deductions may be terminated at any time by telephone or written notice to the
Agent. To be effective with respect to a particular Optional Cash Investment
Date, the Automatic Deduction Form or termination notice must be received by the
Agent no later than 10 days prior to said Optional Cash Investment Date.
Participants may contact the Agent at 1-800-426-5523 to obtain an Automatic
Deduction Form.
19. Are there any expenses to Participants in connection with purchases
under the Plan?
There are no brokerage fees when shares are purchased under the Plan.
Additionally, all general costs of administration of the Plan are to be paid by
the Company. However, if a Participant requests that the Agent sell any of the
shares credited to such Participant's account under the Plan, the Participant
will pay a brokerage commission and any transfer tax or other fees or charges.
See Questions 28 and 29 regarding fees assessed for sales of Common Stock;
Question 28 regarding charges for withdrawal from the Plan; Question 18(b)
regarding fees assessed if the Participant makes optional cash purchases by wire
transfer; and Question 25 regarding fees for maintaining an IRA account under
the Plan.
SAFEKEEPING
20. How can Participants deposit stock certificates with the Agent for
safekeeping?
Participants who wish to avail themselves of the safekeeping feature of the
Plan should mail their certificates to State Street Bank and Trust Company,
Dividend Reinvestment Department, P.O. Box 8200, Boston, Massachusetts
02266-8200. Certificates should be sent by registered or certified mail, return
receipt requested, accompanied by a completed Authorization Form specifying that
(i) the shares are furnished for safekeeping, and
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(ii) dividends on all or a portion of such shares are to be either reinvested
pursuant to the Plan or paid in cash. The Agent will confirm the receipt of any
certificates which are delivered for safekeeping. Shares deposited for
safekeeping must remain in a Participant's account for 60 days before they can
be sold.
REPORTS TO PARTICIPANTS
21. What kind of reports will be sent to Participants in the Plan?
Each Participant will be sent a quarterly statement (monthly if any
optional cash payments were invested in such month) of his or her account
showing dollars invested, shares purchased, the purchase price, the number of
shares purchased, deposited for safekeeping, sold, transferred, or withdrawn and
total shares held for him or her in the Plan. All year-to-date transactions in
the account will be included. These statements are a Participant's continuing
record of the cost of his or her purchases and should be retained permanently
for Federal income tax purposes. The Agent will also send each Participant a
confirmation promptly after enrollment and the purchase of shares with an
accompanying initial investment or optional cash purchase. In addition, each
Participant will receive the most recent prospectus or supplement relating to
the Plan and copies of the same communications sent to every other holder of the
Company's Common Stock, including the Company's interim reports, annual report,
notice of annual meeting and proxy statement, and Federal income tax information
for reporting dividends paid and dividends reinvested.
DIVIDENDS
22. When will Dividends be paid and/or invested?
Dividends are normally paid and/or invested on the 15th day of March, June,
September and December. If the 15th falls on a Saturday, Sunday or other day on
which the New York Stock Exchange is closed, or on which trading is suspended,
the dividend payment date will normally be the next trading day.
23. Will Participants earn dividends on fractional shares?
Yes. Dividends will be earned on full shares and any fraction of a share
credited to a Participant's account.
24. Will dividends be paid on Common Stock if the Investment Date is
subsequent to the record date?
No. Normal dividend payment dates are the 15th day of March, June,
September and December. To receive the dividend, a person must be a holder of
record for those shares of Common Stock on the record date for which a dividend
is set by the Board of Directors (normally the record date is on or around the
1st day of March, June, September and December) so as to allow a sufficient time
for the Company to process dividend payments. Optional Cash Investment Dates are
normally the second date of each month. Thus, shares of Common Stock purchased
with optional cash payments in any month in which dividends are paid will not be
entitled to such dividend payment. Further, although the Investment Date with
respect to reinvestment of dividends will normally be on or around the dividend
payment date, if said Investment Date and dividend payment date were the same,
the Participant would not be entitled to any dividend payment with respect to
the Common Stock purchased on said Investment Date.
IRA ACCOUNTS
25. Is a Participant permitted to establish an IRA?
The Plan allows individual Participants to establish an IRA and to make
Plan purchases through the IRA. Participants may make their own arrangements to
establish an IRA or use First Trust Corporation, the trustee identified by the
Company which has implemented a simplified procedure for establishing a Plan
IRA. Participants may request the appropriate First Trust IRA forms by filling
out the IRA Request Form and returning it directly to
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First Trust Corporation, 717 17th Street, Suite 2600, Denver, Colorado
80202-3323 ("First Trust"). Individuals may open an IRA by completing and
signing an IRA Enrollment Form (adoption agreement) provided by First Trust and
returning it to First Trust with an initial contribution and instructions to
make a purchase under the Plan. Purchases may be funded by regular IRA
contributions or by rolling over an existing IRA or other qualified plan
distribution. There is a minimum initial investment for an IRA Plan account of
$250. If an existing IRA or a qualified plan distribution is rolled over into
the IRA, the Plan's maximum monthly investment limitations do not apply. IRA
Enrollment Forms are available upon request from First Trust which may be
contacted at the above Denver address or by telephone at 1-800-525-8188.
All IRA Participants will operate through an IRA trustee or custodian
rather than the Agent with respect to their IRA accounts. Thus, for purposes of
an IRA account, references in this Prospectus to the Participant mean the IRA
trustee or custodian. All payments and instructions and requests relating to
Plan transactions for the IRA must be forwarded to the IRA trustee or custodian
and not to the Agent. The IRA trustee or custodian will work directly with the
Agent in establishing, giving instructions, making payments and otherwise
effecting Plan transactions with respect to each IRA account.
An initial set up fee, an annual administrative fee and other fees may be
charged by a trustee or custodian for maintaining the IRA. First Trust's fees
are set forth in the IRA Disclosure Statement which each interested individual
will receive from First Trust with the IRA Enrollment Form. The First Trust IRA
Trust Agreement provides that such fees may be deducted from shares purchased by
the IRA under the Plan by cashing out any shares necessary to cover the amount
of such fees.
The Company has agreed to pay the set-up fee for all IRA accounts
established with First Trust on or before December 31, 1997. The Company
reserves the right to extend the period during which it will pay First Trust's
start-up fee for IRA accounts.
CERTIFICATES FOR SHARES
26. Will certificates be issued for shares of Common Stock purchased?
Normally, certificates for shares of Common Stock purchased under the Plan
will not be issued to Participants. The number of shares credited to an account
under the Plan and the number of shares deposited by a Participant with the
Agent for safekeeping will be shown on the Participant's statement of account.
This service protects against loss, theft or destruction of share certificates.
Upon written or telephone request of a Participant to the Agent,
certificates representing any number of whole shares credited to his or her
account under the Plan will be issued to him or her, even though such
Participant wishes to remain in the Plan. Withdrawal of shares in certificate
form in no way affects dividend investment. A new certificate will be mailed to
a Participant promptly after receipt of the request by the Agent. In such event,
any remaining full shares for which certificates are not requested and any
fractional shares will continue to be credited to the Participant's account
under the Plan.
Certificates for fractional shares will not be issued under any
circumstances.
27. In whose name will certificates be registered when issued?
Accounts under the Plan are maintained in the names in which certificates
for shares of Common Stock of Participants were registered at the time they
entered the Plan. Consequently, certificates for whole shares will be similarly
registered when issued.
28. May a Participant sell shares in his or her Plan account?
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Participants may request the Agent to sell any number of whole shares held
in their Plan accounts by giving written or telephone instructions to the Agent.
The Agent will make the sale as promptly as practicable, and in no event later
than 10 business days following receipt of the request. The Participant will
receive the proceeds, less applicable brokerage fees or commissions (payable to
the broker selected by the Agent, which may be an affiliate of the Agent) and
transfer tax, if any. Participants will also be charged an administrative fee of
$5.00 per transaction payable to the Agent when selling shares. Net proceeds of
shares sold through the Plan will be paid to the Participant by check. No check
will be mailed prior to settlement, which typically occurs 3 business days after
the sale of shares.
No Participant shall have the authority or power to direct the date
or price at which Common Stock may be sold. Requests must indicate the number of
shares to be sold and not the dollar amount to be attained. Any request that
does not clearly indicate the number of shares to be sold will be returned to
the Participant with no action taken. A request to sell all shares held in a
Participant's account will be treated as a withdrawal from the Plan. (See
"Withdrawal" below).
WITHDRAWAL
29. How does a Participant withdraw from the Plan?
In order to withdraw from the Plan, a Participant must notify the Agent in
writing or by telephone that he or she wishes to withdraw. Participants will be
charged an administrative fee of $5.00 per transaction when withdrawing shares
from the Plan. If the fee is not paid by the Participant concurrently with the
request for withdrawal, the Agent may sell shares to satisfy such charges. When
a Participant withdraws from the Plan, or upon termination of the Plan by the
Company, certificates for whole shares credited to the Participant's account
under the Plan will be issued and cash will be remitted for any fractional
share. If, upon withdrawal from the Plan, the Participant desires to sell all
shares credited to his or her account under the Plan, such desire must be
specified in his or her request to the Agent for withdrawal. If the Participant
requests such sale or a sale is necessary to pay the withdrawal charge, the sale
will be made by the Agent at the market price at the time of sale, within 10
trading days after receipt of the request. The Participant will receive the
proceeds of the sale less any related brokerage commission and any transfer tax
or other fees or charges. (See Question 28) .
30. When may a Participant withdraw from the Plan?
A Participant may cancel and will be deemed to have canceled his or her
reinvestment of dividends as of an Investment Date if written or telephone
notice of withdrawal from the Plan is received by the Agent at least 15 days
prior to such Investment Date. Dividends payable on or around any such
Investment Date with respect to reinvestment of dividends and all subsequent
dividends will be paid in cash to the stockholder unless he or she re- enrolls
in the Plan pursuant to the procedures outlined in Questions 5 and 6. If notice
of said withdrawal is received by the Agent less than 15 days prior to an
Investment Date with respect to reinvestment of dividends, any dividends paid on
said Investment Date will be invested for the Participant's account. A
Participant who withdraws from the Plan may not join again for 12 months unless
the Company consents.
If notice of said withdrawal is received by the Agent less than 15 days
prior to an Optional Cash Investment Date but at least 48 hours prior to said
Optional Cash Investment Date, any optional cash payments received prior to
receipt of such request will be returned to the Participant. If such notice of
withdrawal is received by the Agent less than 15 days prior to an Optional Cash
Investment Date and less than 48 hours prior to said next Optional Cash
Investment Date, any optional cash payments received prior to receipt of such
request will be invested for the Participant's account on said Optional Cash
Investment Date. The next dividend and all subsequent dividends will be paid to
such stockholder in cash unless he or she re-enrolls in the Plan pursuant to the
procedures outlined in Questions 5 and 6.
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31. May a Participant discontinue dividend reinvestment on shares held
outside the Plan account without withdrawing from the Plan?
Yes, a Participant who wishes to discontinue the automatic reinvestment of
the dividends on the shares held outside the Plan account may do so, without
withdrawing from the Plan, by filing a new Authorization Form or by changing his
or her method of participation by telephone. (See Question 9). However, the
dividends on the shares held in the Plan account will continue to be reinvested.
32. May the Company terminate participation by a Plan Participant?
If a Participant does not own at least one whole share registered in the
Participant's name or held through the Plan, the Participant's participation in
the Plan may be terminated. The Company may also terminate any Participant's
participation in the Plan after written notice in advance mailed to such
Participant at the address appearing on the Agent's records. Participants whose
participation in the Plan has been terminated will receive certificates for
whole shares held in their accounts and a check for the cash value of any
fractional shares held in their Plan accounts. The value of fractional shares
will be based upon the market price of the Common Stock at the time payment is
made.
33. What happens when a Participant sells or transfers some or all of the
shares registered in his or her name?
If a Participant disposes of some or all shares of the Company's Common
Stock registered in his or her name, that transfer will not affect participation
in the Plan. The Agent will continue to reinvest the dividends on the shares
credited to the Participant's account under the Plan until notified by such
Participant that he or she wishes to withdraw from the Plan. However, if less
than one whole share is held in the Plan account, the Participant will receive a
cash payment for the fractional share, and the Plan account will be closed.
OTHER INFORMATION
34. If the Company has a rights offering, how will a Participant's
entitlement be computed?
A Participant's entitlement in a rights offering will be based upon his or
her total holdings--just as his or her dividend is computed each quarter. Rights
on shares of stock registered in the name of a Participant, as well as on whole
shares credited to the Participant's account under the Plan, will be mailed
directly to the Participant in the same manner as to holders of stock not
participating in the Plan. Any rights based on a fraction of a share held in a
Participant's account will be sold by the Agent, if transferable, and the net
proceeds will be invested in the same manner as an optional cash payment as of
the next Optional Cash Investment Date.
35. What happens if the Company issues a stock dividend or declares a stock
split?
Any stock dividends or split shares distributed by the Company on shares
credited to the account of a Participant under the Plan will be added to the
Participant's account. Stock dividends or split shares distributed on shares
registered in the name of the Participant will be mailed directly to such
Participant in the same manner as to stockholders who are not participating in
the Plan.
36. How will a Participant's shares be voted in meetings of stockholders?
Proxy materials will be sent to Participants in connection with any annual
or special meeting of stockholders. Any shares held in a Participant's account
will be voted by the Agent in accordance with the Participant's direction. In
the event that the Participant does not direct the Agent, the Agent will vote or
not vote shares held in a Participant's account as it deems proper. The total
number of shares held in a Participant's account may also be voted in person at
the meeting.
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37. What are the Federal income tax consequences of participation in the
Plan?
Reinvestment of dividends does not relieve a Participant of the liability
for any Federal income tax which may be payable on such dividends. A Participant
reinvesting dividends will be treated for Federal income tax purposes as having
received, on the Investment Date with respect to reinvestment of dividends, a
dividend equal to the then full fair market value of the shares purchased with
such reinvested dividends plus any tax withheld prior to investment, even though
such amount is not actually received in cash. The fair market value will be the
average of the high and low prices of such Common Stock on said Investment Date
as reported by NASDAQ, and not the five-day average used to calculate the
purchase price under the Plan. With respect to reinvested cash dividends and
optional cash payments used to purchase Common Stock in the open market, the
Participant's pro rata share of brokerage commissions paid by the Company for
such purchases will also be treated as dividend income for Federal income tax
purposes.
The cost basis for Federal income tax purposes of any shares acquired with
reinvested dividends will be equal to the fair market value of such shares as of
the applicable Investment Date, and the basis of shares which are purchased with
an initial investment or optional cash payments will be equal to the purchase
price of such shares, plus, in each case, in the case of shares acquired in the
open market, the pro rata share of brokerage commissions that are treated as
dividends as described above.
A Participant will not realize any taxable income when he or she receives
certificates for whole shares credited to his or her account under the Plan.
However, a Participant who, upon withdrawal, receives the proceeds from the sale
of a fractional share credited to his or her account may realize a gain or loss
with respect to such fraction. Gain or loss may also be realized by the
Participant when whole shares are sold, either pursuant to the Participant's
request (see Question 28) or upon withdrawal from the Plan (see Question 29) and
the subsequent sale of the shares withdrawn. The amount of such gain or loss
will be the difference between the amount realized by the Participant and such
Participant's tax basis for the shares sold. The amount realized by a
Participant will be the gross proceeds less brokerage fees and commissions and
any transfer taxes paid by the Participant. Subject to limitations contained in
the Internal Revenue Code, the administrative fees and charges incurred by
Participants upon the sale of shares may be deductible by Participants who
itemize deductions.
If such a sale is made within one year of acquisition, any gain (or loss)
may be taxed as short-term capital gain (or loss). If the sale is made after one
year, the gain (or loss) may be taxed as a long-term capital gain (or loss). The
holding period for shares acquired pursuant to the Plan will begin on the day
following the purchase of such shares.
Federal law requires the Company to notify the Internal Revenue Service of
all sales of stock made under the Plan during the year. If a Participant sells
any shares purchased under the Plan, he or she will be sent a Form 1099-B for
each sale pursuant to Federal income tax regulations. In the case of
Participants (including foreign stockholders) who elect to have their dividends
reinvested and whose dividends are subject to United States income tax or backup
withholding, the amount required to be withheld will be deducted from the
dividends payable to such Participants, and the remaining amount will be applied
to the purchase of shares of Common Stock under the Plan. The filing of any
documentation required to obtain an exemption from, or a reduction in, United
States withholding tax is the responsibility of the Participant.
The Company believes the foregoing is an accurate summary of the Federal
tax consequences of participation in the Plan as of the date of this Prospectus.
This summary may not reflect every possible situation that could result from
participation in the Plan. THEREFORE, EACH PARTICIPANT IS URGED TO CONSULT HIS
OR HER OWN TAX ADVISOR TO DETERMINE THE PARTICULAR FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES RESULTING FROM PARTICIPATION IN THE PLAN AND THE SUBSEQUENT
DISPOSAL OF SHARES PURCHASED PURSUANT TO THE PLAN. If you do not reside in the
United States, your income tax consequences will vary from jurisdiction to
jurisdiction. In addition, the foregoing rules may not be applicable to certain
Participants in the Plan, such as tax-exempt entities (e.g., pension funds and
IRAs).
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38. What provision is made for foreign stockholders whose dividends are
subject to income tax withholding?
In the case of those foreign holders of shares of the Company's Common
Stock whose dividends are subject to United States income tax withholding, the
Agent will invest in such Common Stock an amount equal to the dividends to be
reinvested less the amount of tax required to be withheld. The statements
confirming purchases made for such foreign Participants will indicate the gross
amount of dividends received and the net amount invested.
Optional cash payments received from foreign Participants must be in United
States dollars and will be invested in the same manner as payments from the
other Participants.
39. What is the responsibility of the Company and the Agent under the Plan?
The Company and the Agent in administering the Plan will not be liable for
any act done in good faith or for any good faith omission to act including,
without limitation, any claim or liability arising out of failure to terminate a
Participant's account upon such Participant's death, or with respect to the
prices at which shares are purchased or sold for the Participant's account
and/or the times when such purchases or sales are made, or with respect to any
fluctuation in the market value before or after purchase or sale of shares, or
with respect to the tax treatment of dividends reinvested under the Plan. The
Plan's limitations on liability would not preclude a Participant, acting as a
stockholder of the Company rather than as a Participant, from taking appropriate
action based upon alleged violations of federal securities laws. The Agent
reserves the right to resign at any time upon 60 days' notice to the Company in
writing.
THE PARTICIPANT SHOULD RECOGNIZE THAT THE COMPANY CANNOT ASSURE HIM OR HER
OF A PROFIT OR PROTECT HIM OR HER AGAINST A LOSS ON THE SHARES PURCHASED OR SOLD
UNDER THE PLAN.
40. May the Plan be changed or discontinued?
Notwithstanding any other provision of the Plan, the Board of Directors of
the Company may modify, amend, supersede, suspend or terminate the Plan at any
time, including the period between a dividend record date and a dividend payment
date or the period within 15 days of an Investment Date. The Board of Directors
may increase the number of shares which may be issued by the Company under the
Plan, but may not increase the number of authorized shares of the Common Stock
without stockholder approval. Notice of any material amendment or modification,
or any superseding, suspension or termination of the Plan, will be mailed to all
Participants. No such event will affect any shares then credited to a
Participant's account. Upon any whole or partial termination of the Plan,
certificates for whole shares credited to a Participant' s account under the
Plan will be issued to the Participant and a cash payment will be made for any
fraction of a share.
41. Who interprets and regulates the Plan?
The Company reserves the sole right, in its sole discretion, to interpret
and regulate the Plan. If it appears to the Company that any Participant is
using or contemplating the use of the Plan in a manner or with an effect that,
in the sole judgment and discretion of the Company, is not in the best interests
of the Company or its other stockholders, then the Company may decline to issue
all or any portion of the shares of Common Stock for which any payment by or on
behalf of such Participant is tendered. Such payment (or the portion thereof not
to be invested in shares of Common Stock) will be returned by the Company as
promptly as practicable, without interest. Under such circumstances the Company
may also act to terminate participation by such Plan Participant.
42. May shares held in a Participant's Plan account be pledged or assigned?
Shares credited to a Participant's Plan account may not be pledged or
assigned, and any such purported pledge or assignment will be void. If a
Participant wishes to pledge or assign such shares, a certificate for such
shares must first be issued in his or her name.
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43. How may stockholders, Customers and Employees obtain answers to other
questions regarding the plan?
Any additional questions should be addressed to:
The State Street Bank and Trust Company
Dividend Reinvestment Department
P. O Box 8200
Boston, Massachusetts 02266-8200
Telephone 1-800-426-5523
or
Vincent F. Susco, Jr., Corporate Secretary
Connecticut Water Service, Inc.
93 West Main Street
Clinton Connecticut 06413
Telephone 1-888-CWS-STOK, Extension 342
USE OF PROCEEDS
The Company does not know either the number of shares that will ultimately be
purchased under the Plan or the prices at which shares will be sold. The
proceeds from the sale, if any, of newly-issued shares of Common Stock directly
from the Company will be added to the general funds of the Company and will be
used for the construction program of CWC and for general corporate purposes.
LEGAL OPINION
The legality of issuance of the Common Stock offered hereby was passed upon for
the Company by Day, Berry & Howard, CityPlace, Hartford, Connecticut 06103.
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
18
22
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of these
securities in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction, Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change of the affairs of the Company
since the date hereof.
------------------------------------
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION...............................2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE.........................2
THE COMPANY.........................................3
DESCRIPTION OF THE PLAN.............................3
Purposes.......................................3
Features.......................................3
Administration.................................4
Eligibility....................................5
Participation..................................5
Purchases......................................8
Optional Cash Payments and
Initial Investments..........................9
Safekeeping...................................11
Reports to Participants.......................12
Dividends.....................................12
IRA Accounts..................................12
Certificates for Shares.......................13
Withdrawal....................................14
Other Information.............................15
USE OF PROCEEDS....................................18
LEGAL OPINION......................................18
EXPERTS............................................18
================================================================================
================================================================================
CONNECTICUT WATER SERVICE INC.
[LOGO]
DIVIDEND REINVESTMENT AND
COMMON STOCK PURCHASE PLAN
------------------------------------
COMMON STOCK
(NO PAR VALUE)
PROSPECTUS
DATED: AUGUST 15, 1996
================================================================================
23
II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. Exhibits
Exhibit
Number Description
1.1* Form of Dividend Reinvestment
and Common Stock Purchase Plan
as of August 15, 1996.
1.6* Draft letter to Stockholders
describing changes in Plan.
24
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Connecticut Water Service, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and that it
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of Westbrook
and State of Connecticut, on the 8th day of August, 1996.
CONNECTICUT WATER SERVICE, INC.
/s/ Marshall T. Chiaraluce By /s/ Vincent F. Susco, Jr.
- -------------------------- -------------------------
Marshall T. Chiaraluce Vincent F. Susco
President and Chief Attorney-in-Fact
Attorney-in-Fact August 8, 1996
/s/ David C. Benoit August 8, 1996
- --------------------------
David C. Benoit
(Principal Financial and
Accounting Officer)
25
II-3
Signature Title
--------- -----
/s/ Marshall T. Chiaraluce Director and President
- ----------------------------------- and Chief Executive
Marshall T. Chiaraluce Officer
(Principal Executive Officer)
/s/ William F. Guillaume Director and Vice-
- ----------------------------------- President - Planning
William F. Guillaume
/s/ Francis E. Baker, Jr. By/s/ Vincent F. Susco, Jr.
- ----------------------------------- ---------------------------
Francis E. Baker, Jr. Director Vincent F. Susco, Jr.
Attorney-in-Fact
August 8, 1996
/s/ Harold E. Bigler, Jr. Director
- -----------------------------------
/s/ Astrid T. Hanzalek
- -----------------------------------
Astrid T. Hanzalek Director
/s/ Frederick E. Hennick
- -----------------------------------
Frederick E. Hennick Director
/s/ Marcia L. Hincks
- -----------------------------------
Marcia L. Hincks Director
/s/ William C. Lichtenfels
- -----------------------------------
William C. Lichtenfels Director
26
II-4
Harvey G. Moger Director
Warren C. Packard Director
/s/ Robert F. Neal By/s/ Vincent F. Susco, Jr.
- ----------------------------------- -------------------------
Robert F. Neal Director Vincent F. Susco, Jr.
Attorney-in-Fact
August 8, 1996 2:19 pm
/s/ Rudolph E. Luginbuhl
- -----------------------------------
Rudolph E. Luginbuhl Director
/s/ Donald B. Wilbur
- -----------------------------------
Donald B. Wilbur Director