SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant X
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Check the appropriate box:
X Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
The York Water Company
(Name of Registrant as Specified In Its Charter)
The York Water Company
(Name of Person(s) Filing Proxy Statement)
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X No fee required
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* Set forth the amount on which the filing fee is calculated
and state how it was determined.
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by
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<PAGE>
THE YORK WATER COMPANY
130 EAST MARKET STREET
YORK, PENNSYLVANIA 17401
April 3, 1997
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF THE YORK WATER COMPANY
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Shareholders of The York Water Company will be held at the office
of the Company, 130 East Market Street, in the City of York,
Pennsylvania, on May 5, 1997 at 1:00 P.M. for the purpose of
taking action upon the following proposals:
(1) To elect three (3) Directors to three-year terms of
office;
(2) To consider and vote upon a proposal to amend the
Amended and Restated Articles of Incorporation to
increase the number of authorized shares and to make
certain other changes in the capital stock of the
Company; and
(3) To appoint independent accountants to audit the
financial statements of the Company for the year 1997;
(4) To transact such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on
March 15, 1997 as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting,
and at any adjournment or adjournments thereof.
You are cordially invited to attend the meeting. In the event
you will be unable to attend, you are respectfully requested to
sign, date and return the enclosed proxy at your earliest
convenience in the enclosed stamped return envelope.
By order of the Board of Directors,
JEFFREY S. OSMAN
Secretary
<PAGE>
THE YORK WATER COMPANY
130 EAST MARKET STREET
YORK, PENNSYLVANIA 17401
April 3, 1997
PROXY STATEMENT
This Proxy Statement and the accompanying form of proxy are
being furnished to the shareholders of The York Water Company
(hereinafter referred to as the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company,
whereby shareholders would appoint Irvin S. Naylor, William T.
Morris, and Horace Keesey III and each of them, as Proxies on
behalf of the shareholders, to be used at the Annual Meeting of
the Shareholders of the Company to be held at 1:00 p.m. at the
office of the Company on May 5, 1997 (the "Annual Meeting") and
at any adjournment thereof.
Solicitation of proxies will be primarily by mail. Proxies
may also be solicited personally and by telephone by regular
employees of the Company. The expenses of the solicitation will
be borne by the Company. Such expenses may also include ordinary
charges and expenses of brokerage houses and other custodians,
nominees and other fiduciaries for forwarding documents to
shareholders. This Proxy Statement has been mailed to
shareholders of the Company on or about March 31, 1997.
A shareholder who completes and forwards the enclosed proxy
to the Company is not precluded from attending the Annual Meeting
and voting his or her shares in person, and may revoke the proxy
by delivering a later dated proxy or by written notification to
the Company at any time before the proxy is exercised.
PURPOSE OF THE MEETING
At the Annual Meeting, shareholders of the Company will
consider and vote upon proposals: (i) to elect three (3)
Directors to serve for a term of three (3) years; (ii) to amend
the Company's Amended and Restated Articles of Incorporation (the
"Existing Articles") to increase the authorized capital stock of
the Company from 1,200,000 shares of Common Stock, par value
$10.00 per share, to 6,500,000 shares, divided into 6,000,000
shares of Common Stock, without par value, and 500,000 shares of
Series Preferred Stock, without par value; and (iii) to ratify
the appointment of KPMG Peat Marwick LLP as independent auditors
for the fiscal year ending December 31, 1997. Shareholders may
also consider and vote upon such other matters as may properly
come before the Annual Meeting or any adjournment thereof.
VOTING AT THE MEETING
The outstanding securities of the Company entitled to vote
at the meeting consist of 725,131 shares of Common Stock, par
value $10.00 per share. The presence at the Annual Meeting in
person or by proxy of shareholders entitled to cast a majority of
the votes which all shareholders are entitled to cast will
constitute a quorum for the Annual Meeting.
The record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting or at any
adjournment or adjournments thereof is the close of business on
March 15, 1997. Shareholders are entitled to one vote for each
share on all matters coming before the meeting, except that
shareholders have cumulative voting rights with respect to the
election of Directors. Cumulative voting rights permit each
shareholder to cast as many votes in the election of each class
of Directors to be elected as shall equal the number of such
shareholder's shares of Common Stock multiplied by the number of
Directors to be elected in such class of Directors, and each
shareholder may cast all such votes for a single nominee or
distribute such votes among two or more nominees in such class as
the shareholder may see fit. Discretionary authority to cumulate
votes is not being solicited.
In accordance with Pennsylvania law, a shareholder can
withhold authority to vote for all nominees for directors or can
withhold authority to vote for certain nominees for directors.
Directors will be elected by a plurality of the votes cast.
Votes that are withheld will be excluded from the vote and will
have no effect.
The approval of the proposals to amend the Existing Articles
and to ratify the Company's auditors require the affirmative vote
of a majority of the votes cast by all the holders of the Common
Stock entitled to vote thereon. Abstentions and broker non-
votes, because they are not treated as votes cast, will have no
effect on whether this proposal is approved by the shareholders.
The Company believes that brokers who have received no
voting instructions from their customers will not have discretion
to vote on the proposal to amend the Existing Articles. Brokers
who have received no voting instructions from their customers
will have discretion to vote with respect to election of
directors and the proposal to ratify the Company's auditors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
No person, so far as known to the Company, beneficially owns
five (5) percent or more of the Company's outstanding Common
Stock as of March 15, 1997.
ELECTION OF DIRECTORS
At the Annual Meeting, all the nominees, each of whom is
currently serving as Director, are to be elected to serve for the
ensuing three (3) years and until their respective successors
have been elected and qualified. The Company has a total of nine
Directors, who are elected to staggered three-year terms of
office. Each share represented by the enclosed proxy will be
voted for each of the nominees listed, unless authority to do so
is withheld. If any nominee becomes unavailable for any reason
or if a vacancy should occur before the election (which events
are not anticipated), the shares represented by the enclosed
proxy may be voted for such other person as may be determined by
the Proxies.
The three directors are to be elected by a plurality of the
votes cast at the Annual Meeting. The Board of Directors
unanimously recommends a vote "FOR" each of the nominees.
The information appearing in the following table with respect to
principal occupation and beneficial ownership of Common Stock of
the Company has been furnished to the Company by the three
nominees and the six directors continuing in office as of March
15, 1997.
<TABLE>
<CAPTION>
Full Percent
Shares of
Dir. Owned Total
Principal Occupation Since Benefi- Shares
Name Age During Last Five cially Out-
Five Years <F1> standing
<F2>
<S> <C> <C> <C> <C> <C> <C>
Frank Motter* 69 President, Motter Printing 3/26/79 4,546 <F3> 0.63
Press Co.,
June, 1972 to date
George Hay Kain, III, Esq.48 Sole Practitioner, 8/25/86 3,740 <F4> 0.52
Law, April, 1982 to date
Michael W. Gang, Esq.**46 Partner, Morgan, Lewis 1/22/96 349 0.05
& Bockius LLP, Counselors
at Law, October, 1984
to date. Morgan, Lewis
& Bockius LLP is counsel
to the Company
TO CONTINUE FOR TERMS EXPIRING IN 1998
Irvin S. Naylor* 61 Chairman of the Board, 10/31/60 3,262 0.45
The York Water Company,
September, 1993 to date
Secretary-Treasurer, The York Water
Company, May, 1977 to September, 1993
President/Owner, Snow Time, Inc., Owns
and Operates Ski Areas, June, 1964 to date
Vice Chairman/Owner, Cor-Box, Inc.,
Mfg. Corrugated Boxes, June, 1966 to date
William T. Morris, P.E.* 59 President and Chief 4/19/78 2,309 <F5> 0.32
Executive Officer, The
York Water Company, May,
1995 to date
President and General Manager,
The York Water Company, May, 1982
to May, 1995
Horace Keesey III* 68 Vice Chairman of the Board 8/27/79 3,120 <F6> 0.43
The York Water Company, May, 1995 to date
Vice President, The York Water
Company, May, 1986 to May, 1995
Consultant to the paper industry,
October, 1991 to date
TO CONTINUE FOR TERMS EXPIRING IN 1999
Paul W. Ware* 50 Chairman, Penn Fuel Gas, Inc. 3/27/89 32,478 <F7> 4.48
June, 1990 to date.
President, June, 1989
to March, 1992
John L. Finlayson** 56 Vice President-Finance and 9/2/93 308 0.04
Administration, Susquehanna Pfaltzgraff
Co., August, 1978 to date
Chloe R. Eichelberger 62 Owner/President/Chief 9/15/95 451 0.06
Executive Officer
Chloe Eichelberger Textiles, Inc.,
September, 1987 to date
All Directors and
Executive Officers
as a group 50,563 <F8> 6.97
* Members and (**) Alternate Members of the Executive Committee.
<F1> Except as indicated in the footnotes below, Directors possessed sole
voting power and sole investment power with respect to all shares set
forth in this column.
<F2> The percentage for each individual or group is based on the aggregate
shares outstanding as of March 15, 1997 (725,131 shares).
<F3> Includes 1,000 shares held by wife for which Mr. Motter disclaims
beneficial ownership.
<F4> Includes 775 shares held by wife and child for which Mr. Kain disclaims
beneficial ownership. Also includes 1,557 shares held by estate of his
grandfather, for which he is one of three co-trustees and shares voting
power and investment power.
<F5> Includes 179 shares owned by Mr. Morris' wife for which Mr. Morris
disclaims beneficial ownership.
<F6> Includes 665 shares owned jointly with Mr. Keesey's four adult children
on which he shares voting and investment power.
<F7> Includes 900 shares held by Mr. Ware as custodian for two minor children
for which Mr. Ware disclaims beneficial ownership. Also includes 30,865
shares held by Oxford Foundation, a charitable foundation, of which Mr.
Ware is a Director. Mr. Ware shares voting power and investment power
with respect to this holding.
<F8> Includes shares owned by family members, and certain other shares, as to
which some Directors and Officers disclaim any beneficial ownership and
which are further disclosed in the notes above.
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that during the year ended December
31, 1996, its directors and executive officers complied with all
applicable filing requirements of Section 16(a) of the
Securities Exchange Act of 1934. The foregoing statement is
based solely upon a review of copies of reports furnished to the
Company and written representations of its Directors and
executive officers that no other reports were required.
MEMBERS OF OTHER BOARDS OF DIRECTORS
The following members of the Board of Directors of The York
Water Company are Board members of publicly held companies as
indicated below:
Companies Other Than
Board Members The York Water Company
Mr. Frank Motter Drovers Bancshares Corp.
and
The Drovers & Mechanics Bank
Mr. Paul W. Ware American Water Works Company
COMMITTEES AND FUNCTIONS
The Company has an Executive Committee, an Audit Committee and a
Compensation and Nomination Committee, all of which are composed
of members of the Board of Directors.
The Executive Committee held ten (10) meetings during the
fiscal year ended December 31, 1996. The Executive Committee is
empowered to function as delegated by the Board of Directors.
The Audit Committee held two (2) meetings in 1996. The
Audit Committee monitors the audit functions of our independent
public accountants and internal controls of the Company. The
Audit Committee of the Company is composed of the following
Directors appointed by the Board: Paul W. Ware, Chairman; Frank
Motter; John L. Finlayson; and Chloe R. Eichelberger.
The Compensation and Nomination Committee held two (2)
meetings in 1996 and considers and makes recommendations to the
Board of Directors concerning the proposed compensations,
salaries and per diems of the corporate officers, Directors and
members of the Committees of the Board of Directors of the
Company and makes recommendations to the Board of Directors for
nominations for Directors and officers of the Company. This
Committee will consider nominees recommended by shareholders of
the Company. Such recommendations should be made in writing,
should include a statement of the recommended nominee's
qualifications, and should be addressed to the Committee at the
address of the Company. In accordance with the Company's
bylaws, actual nominations must be made in writing and must be
received by the Company not less than ninety (90) days before
the date of the Annual Meeting. The Compensation and Nomination
Committee is composed of the following Directors appointed by
the Board: Frank Motter, Chairman; Paul W. Ware; John L.
Finlayson; Michael W. Gang; and Irvin S. Naylor, ex officio.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning
compensation paid or accrued by the Company to the chief
executive officer of the Company. No other executive officer of
the Company earned more than $100,000 in salary during any of
the last three fiscal years. The Company has not paid any
bonuses in any of the last three fiscal years.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and All Other
Principal Compensation
Position Year Salary($)(1) ($)(2)
William T. Morris, 1996 134,836 2,339
President, Chief 1995 119,978 2,339
Executive Officer 1994 104,960 2,339
and Director
(1) Includes amounts deferred by Mr. Morris
under the Company's deferred compensation
program for management and supervisory
personnel (the "Deferred Compensation
Program").
(2) Represents $500 of Company matching
contributions to the 401(k) plan and $1,839
in insurance policy premiums expended by the
Company to fund Mr. Morris' interest in the
Deferred Compensation Program. It is
anticipated that the Company will expend the
total of $7,355 in remaining policy premiums
to fund Mr. Morris' interest in the Deferred
Compensation Program.
Officers with five years' service are entitled to benefits
under the Company's General and Administrative Employees Pension
Plan (the "Pension Plan") upon retirement after attaining age
55. The pension benefit computation is based on the years of
service times the sum of $16.50 and 1-1/2% of that portion of
the final average monthly earnings which are in excess of $400.
The final average monthly earnings are the average of the
employee's earnings, exclusive of overtime earnings, for the 60
months immediately preceding the date the pension benefit
calculation is made. As of December 31, 1996, Mr. Morris has
been credited with 28 years of service under the Pension Plan.
The following table illustrates the approximate annual benefit
that may become payable under the Pension Plan to the executive
officers who have met both the five year and 55 year age
requirements, based upon the indicated assumptions as to
remuneration and years of credited service.
Remuner
ation Years of Service
10 15 20 25 30
$145,000 $22,890 $34,335 $45,780 $57,225 $68,670
The above figures assume retirement at age 65 with a
straight-life annuity and without reduction for a
survivor benefit or Social Security benefits.
The Company maintains a supplemental retirement program
(the "Supplemental Plan"), which provides senior management with
a retirement benefit in addition to the Pension Plan. The
Supplemental Plan is designed to encourage management to stay
with the Company until retirement. Supplemental Plan benefits
have been made available to four members of the Company's
management and are payable to the executive or his beneficiary
(a "Supplemental Plan Beneficiary") monthly over a period of 180
months. The annual benefit payable under the Supplemental Plan
(the "Annual Benefit") may be calculated by multiplying the
number of years of service subsequent to December 31, 1983 but
prior to the attainment of age 65, by a predetermined annual
retirement benefit unit, which in the case of Mr. Morris is
$3,600 and in the case of all Supplemental Plan Participants
ranges from $1,200 to $3,600. The estimated Annual Benefit
payable to Mr. Morris at normal retirement age under the
Supplemental Plan is $70,176. The Supplemental Plan is funded
by insurance policies owned by the Company on each manager
covered by the Supplemental Plan, and if the assumptions made as
to mortality experience, policy dividends and other factors (the
"Funding Assumptions") are realized, the Company will recover
all of its payments made under the Supplemental Plan plus a
factor for the use of the Company's money. The Company is
obligated to pay Annual Benefits, and Supplemental Plan
Beneficiaries have the status of unsecured creditors of the
Company with respect to Annual Benefits, regardless of whether
the Funding Assumptions are realized and the insurance policies
fully fund or reimburse the Company for its payments under the
Supplemental Plan. The following table illustrates the
approximate Annual Benefits that may become payable to
Supplemental Plan Beneficiaries:
Annual
Retirement Benefit
Unit Years of Service
Subsequent to December 31, 1983
10 15 20 25 30
$3,600 $36,000 $54,000 $72,000 $90,000 $108,000
2,100 21,000 31,500 42,000 52,500 63,000
1,440 14,400 21,600 28,800 36,000 43,200
1,200 12,000 18,000 24,000 30,000 36,000
The Deferred Compensation Program permits eligible
supervisors, managers and executives to defer up to 5% of
salary, normally over an eleven (11) year period, with the
Company matching the deferment, up to 2-1/2% of salary. The
Company has obtained life insurance policies for participants
under the Deferred Compensation Program to fund its future
payment obligations under the Deferred Compensation Program, and
no cash balances are maintained by the Company to fund
participant deferrals, Company matching contributions, or
earnings with respect to such balances derived from the
insurance policies (together, the "Deferred Compensation Program
Balances"). At retirement, each participant, or beneficiary, is
entitled to receive over a ten-year period monthly payments
equal in the aggregate to the Deferred Compensation Program
Balance that accrued with respect to such participant in Company
maintained book-entry accounts. Except for Mr. Morris, no other
directors participate in this program. Mr. Morris' projected
annual payment under this program is $20,599.
Each Director of the Company is entitled to receive $3,500
either in the form of a cash payment by the Company to the
Director or on behalf of the Director to fund a life insurance
policy for the benefit of the Director's named beneficiary. In
addition, each Director who is not a regular full-time employee
of the Company is entitled to receive the following amounts for
services rendered to the Company: $3,200 per annum in
Directors' fees; $3,200 per annum for service as a regular
member of the Executive Committee; a per diem of $400 for each
Board of Directors' Meeting; and a per diem of $350 for a
regular or alternate member's attendance at each Executive
Committee Meeting. There were 14 Board of Directors' Meetings
and 10 Executive Committee Meetings during the fiscal year ended
December 31, 1996. All Directors attended at least 75% of the
scheduled Board of Directors' Meetings. All Directors attended
at least 75% of the scheduled committee meetings except Irvin S.
Naylor and Frank Motter, who attended 67% and 71% respectively.
COMPANY PERFORMANCE
The following line graph presents the annual and cumulative
total shareholder return for The York Water Company Common Stock
over a five-year period, as compared to a comparable return
associated with an investment in the S&P 500 Composite Index and
a composite index of water companies prepared and maintained by
Edward D. Jones & Co. (the "Peer Index").
(Details of graph not transmitted electronically are as follows:
1992 1993 1994 1995 1996
Group 114 125 111 120 135
York Water 114 126 141 155 161
S&P 109 124 122 156 175
The line graph above assumes $100 invested on December 31,
1991 in the Company's Common Stock and the stock of companies
included in the S&P 500 and the Peer Index and assumes the
quarterly reinvestment of dividends. The return for the Peer
Index presented above took into consideration the cumulative
total return of the common stock of the following water
companies included in the Peer Index: American Water Works
Inc.; Aquarion Company; California Water Service; Connecticut
Water Service Inc.; Consumers Water Company; Elizabethtown
Corp.; GWC Corp.; IWC Resources Corp.; Middlesex Water Company;
Philadelphia Suburban Corp.; SJW Corp.; Southern California
Water; Southwest Water Co.; and United Water Resources.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Nomination Committee of the Board of
Directors of the Company establishes general compensation
policies of the Company and considers and makes recommendations
to the Board of Directors concerning the proposed compensation,
salaries and per diems of the President and Chief Executive
Officer, the Chairman, Vice Chairman, directors and members of
the Committees of the Board of Directors of the Company. The
Chairman and Vice Chairman serve the Company in a part-time
capacity, and the amount of salary payable to such officers has
been determined by the Committee based upon the amount of time
dedicated and value of contributions made to the Company.
Mr. Morris, the Chief Executive Officer of the Company,
served the Company as its President and General Manager from
May, 1982 to May, 1995. In May 1995 Mr. Morris assumed the
position of President and Chief Executive Officer. The
Compensation and Nomination Committee historically has
established Mr. Morris' compensation after considering
comparative salary data from industry and other salary surveys
(including data derived from publicly disclosed compensation
information concerning many of the companies identified in the
Peer Index), individual past performance, the Company's
performance (on an absolute basis and in comparison to peer
performance within the context of a regulated industry), and to
a lesser extent changes in the cost of living in the Company's
service territory. While no formal salary or compensation
guidelines have been developed or used, salary levels have been
determined after balancing the foregoing factors (in their
entirety, without giving weight to any particular factor and
without regard to any particular relationship between
compensation levels and any quantitative or qualitative aspect
of the Company's performance) with the interests of the
Company's shareholders, customers and employees.
Section 162(m) of the Internal Revenue Code generally disallows,
in certain circumstances, a tax deduction to public companies
for compensation over $1 million paid to a corporation's chief
executive officer and next four most highly compensated
executive officers. The Company does not have any compensation
programs that would be impacted by Section 162(m).
Frank Motter, Chairman John L. Finlayson, Member
Paul W. Ware, Member Michael W. Gang, Member
Irvin S. Naylor, ex officio
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Irvin S. Naylor, Chairman of the Board, is a non-voting ex
officio member of the Compensation and Nomination Committee.
PROPOSAL TO AMEND THE AM ENDED AND RESTATED
ARTICLES OF INCORPORATION
The Board has adopted a resolution unanimously approving
and recommending to the Company's shareholders amendments of the
Existing Articles. The text of the proposed amendments (the
"Amendments"), which amend and restate Article V and Article VI
of the Existing Articles, is attached hereto as Exhibit A and is
incorporated herein by reference.
The proposed Amendments would (i) increase the authorized
capital stock of the Company from 1,200,000 shares of Common
Stock, par value $10.00 per share, to 6,500,000 shares, divided
into 6,000,000 shares of Common Stock, without par value, and
500,000 shares of Series Preferred Stock, without par value;
(ii) eliminate the concept of par value of the capital stock;
and (iii) delete certain provisions relating to dividends and
shares in distribution on Common Stock in order to allow for the
possible future issuance of Series Preferred Stock.
Increase in Authorized Common Stock; Authorization of Series
Preferred Stock
The Company currently has 1,200,000 shares of Common Stock
authorized, of which 725,131 shares were outstanding as of March
15, 1997. An additional 1,054 and 42,368 shares of
Common Stock have been reserved for issuance under the Company's
employee stock purchase plan and dividend reinvestment plan,
respectively, as of the same date.
The Board of Directors believes that the proposed changes
in the authorized capital stock of the Company, which includes a
substantial increase in the number of shares of Common Stock,
the authorization of shares of Series Preferred Stock, and the
elimination of par value, are in the best interests of the
Company. Although the Company has no present agreements or
commitments for the issuance of any additional shares that would
be authorized by the Amendments, management intends to recommend
to the Board of Directors as early as its first meeting after
the shareholders meeting in May a proposal to declare a stock
split in the range of four-to-one, subject to the approval by
the Company's shareholders of the proposed Amendments and the
approval of the Pennsylvania Public Utility Commission.
Moreover, the Board of Directors believes that it is advisable
to authorize an adequate number of additional shares beyond the
number necessary for the contemplated stock split to have
sufficient shares available for, among other things, possible
issuance in connection with future financing activities, the
Company's dividend reinvestment plan, employee stock purchase
plan and other stock-based plans that might be implemented in
the future, future stock splits, the possible acquisition of
other companies and properties, and other proper corporate
purposes.
The provision for the authorization of shares of Series
Preferred Stock is intended to provide additional flexibility in
raising capital for the Company's needs. The precise terms of
the Series Preferred Stock would be determined by the Board of
Directors at the time of issuance. Such terms are typically the
result of negotiations between the Company and the prospective
purchasers and could include provisions for a stated level of
dividends, conversion rights, voting rights, rights on
liquidation or dissolution, and other rights and preferences,
some of which might have priority over the shares of Common
Stock.
The additional shares of Common Stock and the shares of
Series Preferred Stock could be issued for any proper corporate
purpose without delay or further shareholder approval, except as
may be required by applicable law or regulatory agencies. The
voting and other ownership rights of the Company's shareholders
may be diluted by any issuances of additional Common Stock or
shares of Series Preferred Stock. Shareholders will not have
preemptive rights to subscribe for shares of Common Stock or
Series Preferred Stock, unless the Company grants such rights at
the time of issue. The additional shares of Common Stock for
which authorization is sought would be identical to the shares
of Common Stock now authorized, except that both the additional
shares and the currently authorized shares would have no par
value. Except for the contemplated stock split and issuance of
Common Stock under existing plans, the Company has no plans or
proposals to issue any additional shares of Common Stock or to
issue shares of Series Preferred Stock.
The Board is required to make any determination to issue
additional shares of Common Stock or shares of Series Preferred
Stock based on its judgment as to the best interests of the
Company. Although the Board has no present intention of doing
so, it could issue shares of Common Stock or Series Preferred
Stock that could, depending on the circumstances, make more
difficult or discourage an unfriendly attempt to obtain control
of the Company by means of a merger, tender offer, proxy contest
or otherwise. The issuance of additional shares of Common Stock
or shares of Series Preferred Stock also could be used to dilute
the voting power and ownership interests of a person or entity
seeking to obtain control of the Company if the Board considered
the action of such entity or person not to be in the best
interests of the Company. Any such issuance could also have the
effect of diluting the earnings per share, book value per share
and voting power of other holders of Common Stock. The
Company's Board of Directors is not aware of any present effort
by any person or entity to obtain control of the Company.
Elimination of Par Value
In connection with the proposed increase in the number of
authorized shares, the Board of Directors believes it is
advisable to eliminate the par value of its capital stock,
because the concept of par value no longer has legal
significance as a result of the adoption of the Pennsylvania
Business Corporation Law of 1988, as amended (the "BCL").
Formerly, the par value of capital stock effectively imposed
restrictions on a corporation's ability to declare and pay
dividends and other distributions to its shareholders. The
legality of dividends and other distributions under the BCL is
determined by reference to a solvency test, which governs
without regard to what the articles of incorporation may provide
with respect to par value or stated capital. The elimination of
par value will have no effect on the Company's ability to
declare and pay dividends or other distributions or on the value
of the Company's shares.
Deletion of Dividend and Related Provisions
The Board of Directors believes the deletion of the
dividend and distribution provisions from Article VI of the
Existing Articles, which presently provides that "The Common
Stock alone shall receive all further dividends and shares upon
liquidation, dissolution, winding up or distribution," is in the
best interests of the Company. Although the Company has no
present agreements or commitments for issuing capital stock with
a preference as to dividends or distributions over the Common
Stock, the proposed amendment to Article V gives the Board of
Directors the full authority permitted by law to determine,
among other things, the preferences of any class or any series
of any class of the Series Preferred Stock. Such authority is
designed to give the Board of Directors the maximum flexibility
permitted by law in issuing Series Preferred Stock.
Vote Required; Recommendations
Approval of the proposal to amend the Existing Articles
requires the affirmative vote of a majority of the votes cast by
all of the holders of Common Stock entitled to vote thereon at
the Annual Meeting.
The Board of Directors recommends a vote 'FOR' the proposal
to amend the Existing Articles.
SHAREHOLDER APPROVAL OF
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has approved the
recommendation of the Audit Committee for the appointment of
KPMG Peat Marwick LLP, last year's auditors, as independent
public accountants to audit the financial statements of the
Company for the year 1997. It is intended that, unless
otherwise specified by the shareholders, votes will be cast
pursuant to the proxy hereby solicited in favor of the
appointment of KPMG Peat Marwick LLP.
Audit fees are approved by the Company's Audit Committee
and all professional services to be rendered by KPMG Peat
Marwick LLP are approved by the Board of Directors, and the
possible effect on auditors' independence of providing nonaudit
services was considered prior to the service being rendered.
Fees for audit services include the examination of
financial statements, assistance with the preparation of the
Annual Report to Shareholders and the Annual Report on Form 10-K
to the Securities and Exchange Commission, tax computation
assistance, and consultation in connection with various
accounting and tax related matters.
Representatives of KPMG Peat Marwick LLP are expected to be
present at the Annual Meeting. Such representatives will have
an opportunity to make a statement, if they so desire, and will
be available to respond to appropriate questions from
shareholders.
Adoption of this proposal requires the affirmative vote of
a majority of the votes cast by all shareholders entitled to
vote at the Annual Meeting. The Board of Directors unanimously
recommends a vote "FOR" this proposal. It is understood that
even if the selection of KPMG Peat Marwick LLP is ratified, the
Board, at its discretion, may direct the appointment of a new
independent auditing firm at any time during the year if the
Board determines that such a change would be in the best
interests of the Company and its shareholders.
DISCRETIONARY AUTHORITY
The notice of Annual Meeting of Shareholders calls for the
transaction of such other business as may properly come before
the meeting. The Board of Directors has no knowledge of any
matters to be presented for action by the shareholders at the
meeting other than is hereinbefore set forth. In the event
additional matters should be presented, however, the proxies
will exercise their discretion in voting on such matters.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTORS
In accordance with the Company's bylaws, shareholder's proposals
and nominations for Directors for consideration at the 1998
Annual Meeting of Shareholders must be received by the Company
in writing prior to February 1, 1998.
Exhibit A
PROPOSED
AMENDMENTS
TO AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
THE YORK WATER COMPANY
Article V.
The aggregate number of shares which the Corporation shall have
authority to issue is 6,500,000 shares, divided into 6,000,000
shares of Common Stock, without par value, and 500,000 shares of
Series Preferred Stock, without par value. At any meeting of
the shareholders, each holder of Common Stock shall be entitled
to one vote per share. The board of directors shall have the
full authority permitted by law to determine the voting rights,
if any, and designations, preferences, qualifications,
limitations, restrictions, and the special or relative rights of
any class or any series of any class of the Series Preferred
Stock that may be desired.
Article VI.
Holders of Common Stock shall have the right to cumulate
their votes for the election of directors of the Corporation.
<PAGE>
THE YORK WATER COMPANY
PROXY
(Solicited on Behalf of the Board of Directors)
The York Water Company hereby constitute(s) and appoint(s) the
proxies named in the Proxy Statement, and each of them, as the
substitute and proxy of the undersigned with power of
substitution, for and in the name of the undersigned, to vote at
the annual Meeting of the shareholders of The York Water Company
to be held at 1:00 P.M. on the date set forth on this Proxy, and
at any adjournment or adjournments thereof, upon the proposals
referred to, and , in their discretion, upon any other business
which may properly come before the meeting, all in accordance
with and as more fully described in the Notice and Proxy
Statement for said meeting.
Account No. Shares Annual Meeting on May 5, 1997
Said Proxies are authorized and directed to vote as indicated
upon the following Proposals:
Proposal (1) Election of Directors:
For All Three Nominees
(Except as marked to the Contrary Below)
Withhold Authority
(To vote for all nominees Listed Below
Instruction: to Withhold authority to vote for any individual
nominee strike a line through the nominee's name in the list
below; or to cumulate your voted (the total may not exceed three
times the number of your shares) insert the number of votes you
desire for each nominee by specifying that number in the space
provided under such nominee's name.
Frank Motter
( votes)
George Hay Kain, III
( votes)
Michael W. Gang
( votes)
The Board of Directors recommends a vote "for" all three
nominees
(2) Approve amendment to the Amended and Restated Articles of
Incorporation
For
Against
Abstain
(3) Appoint KPMG Peat Marwick LLP as auditors
For
Against
Abstain
(Authority to vote for the election of Directors shall be deemed
to be granted unless specifically withhold. Shareholders'
directions on other matters set forth above will be complied
with, but if no direction is made, shares will be voted in
accordance with the recommendations of the Board of Directors).
Signature
Signature if held jointly
Dated
If no direction is made, this Proxy will be voted in accordance
with the recommendations of the Board of Directors
Multiple owners should all sign. Executors, administrators,
trustees, guardians, etc., should so indicate when signing.
