As filed with the Securities and Exchange Commission on December 5, 2001
Registration No. 33-53211
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST EFFECTIVE AMENDMENT NO. 2
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)
CONNECTICUT 06-0739839
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
93 WEST MAIN STREET, CLINTON,
CONNECTICUT 06413 (Name, Address,
including Zip Code, and Telephone Number, including
Area Code, of Agent for Service)
Copy to:
David C. Benoit --------
Vice President - Finance and Accounting Timothy L. Largay
Connecticut Water Service, Inc. Murtha Cullina LLP
93 West Main Street CityPlace I, 185 Asylum Street, 29th Floor
Clinton, Connecticut 06413 Hartford, Connecticut 06103-3469
(860) 669-8630 (860) 240-6017
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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.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registrations statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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.
Prospectus
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
shareholders, and customers and employees of the Company's regulated water
utility subsidiaries, The Connecticut Water Company, The Crystal Water Company,
The Gallup Water Service, Inc., and The Barnstable Water Company, who reside in
Connecticut or Massachusetts, with
AUTOMATIC DIVIDEND REINVESTMENT
of all or a percentage of dividends on our Common Stock in additional shares of
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 (5) 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.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this Prospectus is November 19, 2001
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is only part of an amended registration statement we
have filed on Form S-3 with the U.S. Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended, and therefore omits certain
information contained in the registration statement. We have also filed exhibits
and schedules with the registration statement that are excluded from this
prospectus, and you should refer to the applicable exhibit or schedule for a
complete description of any statement referring to any contract or other
document.
We are a public company and file reports, proxy statements, and other
information with the SEC. Copies of our reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the SEC at:
SEC's Public Reference Midwest Regional Office Northeast Regional Office
Room Citicorp Center, Suite 1400 233 Broadway
450 Fifth Street, N.W. 500 W. Madison Street New York, NY 10279
Washington, D.C. 20549 Chicago, IL 60661-2511
Reports, proxy statements, and other information concerning
Connecticut Water may also be inspected at:
The National Association of Securities Dealers
1735 K Street, N.W.
Washington, D.C. 20006
Copies of these materials can also be obtained by mail at prescribed
rates from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC
maintains a Website that contains reports, proxy statements, and other
information regarding Connecticut Water. The address of the SEC Website is
http://www.sec.gov.
DOCUMENTS WE INCORPORATE BY REFERENCE
Our SEC file number is 000-08084. The SEC allows us to "incorporate
by reference" the information we file with it. This means that we can disclose
important information to you by referring you to other documents that contain
the information. The information we incorporate by reference is considered to be
a part of this prospectus and automatically updates and supersedes previously
filed information.
We incorporate by reference the following filings and all of our
subsequent filings made pursuant to the Securities Exchange Act of 1934 (the
"1934 Act"), as amended, between the date of this prospectus and the termination
of the offering of shares of Common Stock offered by this prospectus:
o our annual report on Form 10-K for the fiscal year ended December 31,
2001, filed with the SEC on March 26, 2001;
o our proxy statement dated March 19, 2001 for the annual meeting of
shareholders held on April 20, 2001;
o our quarterly report on Form 10-Q for the fiscal quarter ended March
31, 2001, filed with the SEC on May 14, 2001;
o our proxy statement dated July 6, 2001 for the special meeting of
shareholders held on August 6, 2001;
o our quarterly report on Form 10-Q for the fiscal quarter ended June
30, 2001, filed with the SEC on August 13, 2001;
o our current report on Form 8-K filed with the SEC on September 10,
2001;
o our quarterly report on Form 10-Q for the fiscal quarter ended
September 30, 2001, filed with the SEC on November 14, 2001; and
o the description of our common stock, no par value, contained in our
Registration Statement No. 33-36794 on Form S-2 filed under the
Securities Act of 1933, including any amendments or reports filed for
purposes of updating this description.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus.
You may obtain any of these incorporated documents from us without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference in such document. You may obtain
documents incorporated by reference in this prospectus by requesting them from
us in writing or by telephone at the following address:
Connecticut Water Service, Inc.
93 West Main Street
Clinton, Connecticut 06413
Attention: Michele G. DiAcri, Corporate Secretary
Telephone 1-800-428-3985 (ext. 3015)
Our internet web address is http://www.ctwater.com. Information
contained on our web site is not incorporated into this prospectus.
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THE COMPANY
Connecticut Water Service, Inc. ("We" or the "Company") is the parent
company of The Connecticut Water Company ("CWC") , the Crystal Water Utilities
Corporation ("CWUC"), Gallup Water Service, Inc. ("GWS"), and the Barnstable
Water Company, based in Barnstable, Massachusetts ("BWC"). These regulated water
companies provide water for residential, commercial, industrial, municipal, and
fire protection purposes to approximately 285,000 people in 40 towns in
Connecticut and Massachusetts as well as providing water-related services under
contract to municipalities and companies. The Company and its subsidiaries
collectively represent the largest domestic investor-owned water system in
Connecticut measured by operating revenues and utility plant investment.
We were organized in 1956 as Suburban Water Service, Inc. and have
engaged in the business of acquiring and operating water companies through
controlling stock ownership. In 1975, we changed our name to Connecticut Water
Service, Inc., after acquiring all of the outstanding common stock of CWC. We
are a non-operating company substantially all of whose income is derived from
the earnings on the common stock of CWC, CWUC, GWS, and BWC. CWC's debt and
preferred stock are held primarily by institutional investors.
Our future ability to pay dividends on our Common Stock is dependent
upon the continued ability of CWC, CWUC, GWS, and BWC to pay dividends to us.
The profitability of the operations of the water utility industry generally and
of our operating subsidiaries (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, CWUC, GWS, and BWC have 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 our operating subsidiaries'
control impact on the costs of construction, materials and employee costs. See
"Item 1. Business" in our latest Annual Report on Form 10-K filed pursuant to
the 1934 Act.
Our mission is to provide high quality water service to our customers
at a fair return to our shareholders while maintaining a work environment that
attracts, retains and motivates our employees to achieve a high level of
performance.
Our corporate headquarters are located at 93 West Main Street,
Clinton, Connecticut 06413. Our telephone number is 860-669-8630, and our
Internet address is http://www.ctwater.com.
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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, no
par value ("Common Stock") and customers and employees of each of the Company's
regulated water subsidiaries (CWC, CWUC, GWS and BWC, collectively the "Water
Companies") who reside in Connecticut or Massachusetts 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 shareholder, customer or employee described in Question 4 below 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.
(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, or automatic account withdrawal.
(c) Residential utility customers of the Water Companies,
including all members of households served by the Water Companies,
and full-time employees of the Water Companies residing in
Connecticut or Massachusetts 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.
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(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?
Registrar and Transfer 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:
REGISTRAR AND TRANSFER COMPANY TELEPHONE: 1-800-368-5948
10 COMMERCE DRIVE EMAIL: INFO@RTCO.COM
CRANFORD, NJ 07106-3572 INTERNET: WWW.RTCO.COM
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Eligibility
4. Who is eligible to participate? The following persons are
eligible to participate in the Plan (each, a "Participant"):
(a) Shareholders. 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
shareholders of record by having their shares
transferred into their names.
(b) Customers. All residential utility customers of
each of the Company's regulated Water Company
subsidiaries (CWC, CWUC, GWS and BWC) are
eligible to participate in the Plan, as well as
all members of households served by the Water
Companies. Water consumers in the franchise
territory served by the Water Companies 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 either Connecticut or
Massachusetts. Business customers of the Water
Companies are not eligible to participate.
Customers and household members described in this
subsection (b) who are eligible to participate in
the Plan are herein referred to as "Customers."
(c) Employees. All full-time employees of the Water
Companies (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 shareholder, Customer or Employee
participate?
A shareholder 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 shareholders 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 or Massachusetts resident. Each Authorization Form for a
Customer who is not a registered shareholder must be accompanied by a check for
at least
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$25. A shareholder account will be opened by the Agent for Customers and
Employees who become new shareholders 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 that he or she wishes to
withdraw. (See Question 29.) A Participant who ceases to be a Customer or
Employee of the Water Companies 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
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 shareholder, 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 fifteenth (15th) 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 15th to shareholders of
record on March lst, or to have optional cash payments received with an
Authorization Form invested on or around April 15th, a Participant's
Authorization Form must be received by the Agent no later than April 9th. If the
Authorization Form is received after April 9th, 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 15th).
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Optional cash payments may be made when enrolling by enclosing with
the Authorization Form a check payable to Registrar and Transfer 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 shareholder, 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 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 thirty (30) days prior to the
dividend payment date. Direct dividend deposits may be terminated at any time by
the Participant by written 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 Company at 1-800-428-3985 (ext. 3015) to
obtain a Direct Dividend Deposit Form.
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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, an additional Authorization Form must be executed and
returned to the Agent as specified in Question 5. Participants who wish to
change the percentage of dividends reinvested with respect to shares registered
in their names must also execute and return to the Agent an additional
Authorization Form. 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, the later-dated
Authorization Form must be received prior to the record date for the next
dividend in order for the later-dated Authorization Form to take effect as of
the next dividend payment date. If the later-dated Authorization Form 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 contact the Agent by telephone?
The Agent may be reached by calling toll free at 1-800-368-5948.
Please be prepared with the Company's name, your Plan account number, and your
Social Security number. Participants' inquiries to this telephone number will be
for informational purposes only. The Agent does not permit Participants in the
Plan to give telephonic notice of changes under the Plan; only written
instructions will be accepted by the Agent.
10. Does participation in the Plan involve any risk?
The risk to shareholders, 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 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 of a profit or protect the Participant 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.
-9-
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 thirty (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).
-10-
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 (5) 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 at 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
thirty (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 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 three (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 five (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 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
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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 Registrar and Transfer 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.
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
fifteenth (15th) day of the month. If the 15th 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 five (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 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 automatic
account
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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 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.
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In the event that any check is returned unpaid for any
reason, the Agent will (i) charge the Participant a $25
administrative fee for each check that is returned unpaid and (ii)
consider the request for investment of such funds void and without
effect and will immediately remove from the Participant's account 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) 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
twenty-five (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 ten (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 (10th) 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 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 ten (10) days prior to said Optional Cash Investment Date.
Participants may contact the Company at 1-800-428-3985 (ext. 3015) 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 flat fee of $10 per sale (for selling 10 or 1,000 shares). See
Questions 28 and 29 regarding fees assessed for sales of Common Stock; Question
28
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regarding charges for withdrawal from the Plan; and Question 25 regarding
fees for maintaining an IRA account under the Plan.
Any brokerage commission and services charges paid by the Company on
a Participant's behalf will constitute dividend income. The Agent will include
such amounts, if any, on any annual information return filed with the Internal
Revenue Service, a copy of which will be mailed to the Participant.
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 Registrar and Transfer Company, 10
Commerce Drive, Cranford, NJ 07016-3572. 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 (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 sixty (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, 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
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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 fifteenth (15th) 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 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
-16-
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.
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 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.
If a Participant's request is received less than five (5) business
days prior to a cash dividend record date, that cash dividend will be reinvested
for the Participant's account and the certificate withdrawal will be processed
thereafter.
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?
Participants may request the Agent to sell any number of whole shares
held in their Plan accounts by giving written instructions to the Agent. Such
instructions may be faxed to the Agent's attention at facsimile no. (908)
497-2310. The Agent will make the sale as promptly
-17-
as practicable, and in no event later than 10 business days following receipt of
the request. The Participant will receive the proceeds, less an administrative
fee of $10.00 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 three
(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 that he or she wishes to withdraw. Participants' requests to
withdraw from the Plan will not be processed between a dividend record date and
a dividend payable date. 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 ten (10) trading days after receipt of the
request. The Participant will receive the proceeds of the sale less the $5.00
administrative fee. (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 notice of
withdrawal from the Plan is received by the Agent at least fifteen (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 shareholder 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 fifteen (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.
-18-
If notice of said withdrawal is received by the Agent less than
fifteen (15) days prior to an Optional Cash Investment Date but at least
forty-eight (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
fifteen (15) days prior to an Optional Cash Investment Date and less than
forty-eight (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 shareholder
in cash unless he or she re-enrolls in the Plan pursuant to the procedures
outlined in Questions 5 and 6.
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 to
change his or her method of participation. (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 undertakes 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
-19-
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
held in the Plan but registered in the name of the Participant will also be
added to the Participant's account; separate certificates for such shares will
not be mailed directly to the Participant.
36. How will a Participant's shares be voted in meetings of
shareholders?
Proxy materials will be sent to Participants in connection with any
annual or special meeting of shareholders. 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.
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.
-20-
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 shareholders) 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).
38. What provision is made for foreign shareholders 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
-21-
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
made in U.S. 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 shareholder 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 sixty (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 fifteen (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 shareholder 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 shareholders, 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.
-22-
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.
43. How may shareholders, Customers, and Employees obtain answers to
other questions regarding the plan?
Any additional questions should be addressed to:
Registrar and Transfer Company Michele G. DiAcri, Corporate Secretary
10 Commerce Drive Connecticut Water Service, Inc.
Cranford, NJ 07106-3572 93 West Main Street
Telephone: 1-800-368-5948 Clinton, Connecticut 06413
email: info@rtco.com Telephone: 1-800-428-3985 (ext. 3015)
Internet: www.rtco.com
-23-
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.
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.
-24-
Prospective investors may rely only on the information contained in this
prospectus. Connecticut Water Service, Inc. has not authorized anyone to provide
any other information. This prospectus is not an offer to sell to - nor is it
seeking an offer to buy these securities from - any person in any jurisdiction
where the offer and sale is not permitted. The information here is accurate only
as of the date of this prospectus, regardless of the time of the delivery of
this prospectus or any sale of these securities.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE Information...............................1
Documents WE INCORPORATE By Reference.............................1
The Company.......................................................3
Description Of The Plan...........................................4
Purposes..........................................................4
Features..........................................................4
Administration....................................................5
Eligibility.......................................................6
Participation.....................................................6
Purchases.........................................................10
Optional Cash Payments and Initial Investments....................12
Safekeeping.......................................................15
Reports to Participants...........................................15
Dividends.........................................................15
IRA Accounts......................................................16
Certificates for Shares...........................................17
Withdrawal........................................................18
Other Information.................................................19
Use Of Proceeds...................................................24
Experts...........................................................24
Connecticut Water Service, Inc.
[GRAPHIC - CORPORATE LOGO]
DIVIDEND REINVESTMENT AND
COMMON STOCK PURCHASE PLAN
COMMON STOCK
(NO PAR VALUE)
------------------
PROSPECTUS
------------------
November 19, 2001
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. Exhibits
(a) Exhibits:
Exhibit No. Exhibit
----------- -------
23.1 Consent of Arthur Andersen LLP
24.1 Power of Attorney of directors of the registrant
99.1 Dividend Reinvestment and Common Stock Purchase Plan, amended
and restated as of November 15, 2001.
99.2 Letter to Shareholders describing changes in Plan, dated October
30, 2001.
99.3 Letter to Shareholders enclosing the Plan prospectus, dated
November 30, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
post-effective amendment No. 2 to its registration statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the Town
of Clinton and State of Connecticut on the 14 th day of November, 2001.
CONNECTICUT WATER SERVICE, INC.
By: /s/ Marshall T. Chiaraluce
------------------------------------
Name: Marshall T. Chiaraluce
Title: Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
By: /s/ Marshall T. Chiaraluce Chairman, President and Chief Executive November 14, 2001
--------------------------
Marshall T. Chiaraluce Officer
(Principal Executive Officer)
By: /s/ David C. Benoit Vice President, Finance and Accounting; November 14, 2001
----------------------------
David C. Benoit Treasurer
(Chief Financial and Accounting Officer)
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Marcia L. Hincks
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Robert F. Neal
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Arthur C. Reeds
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
David A. Lentini
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Harold S. Bigler, Jr.
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Mary Ann Hanley
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Ronald D. Lengyel
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Roger Engle
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Lisa Thibdaue
By: /s/ David C. Benoit* Director November 14, 2001
---------------------------
Donald B. Wilbur
* = signed by David C. Benoit, as attorney-in-fact.
EXHIBIT INDEX
-------------
Exhibit No. Exhibit
----------- -------
23.1 Consent of Arthur Andersen LLP
24.1 Power of Attorney of directors of the registrant
99.1 Dividend Reinvestment and Common Stock Purchase Plan,
amended and restated as of November 15, 2001.
99.2 Letter to Shareholders describing changes in Plan, dated
October 30, 2001.
99.3 Letter to Shareholders enclosing the Plan prospectus, dated
November 30, 2001.