<PAGE>
PROSPECTUS
CASCADE NATURAL GAS CORPORATION
Automatic Dividend Reinvestment Plan
Common Stock
The securities covered by this Prospectus are those shares of
common stock, $1.00 par value ("Common Stock"), of Cascade Natural Gas
Corporation (the "Company") being offered to eligible shareholders and
residential customers of the Company for purchase with reinvested dividends
and optional cash payments pursuant to the Cascade Natural Gas Corporation
Automatic Dividend Reinvestment Plan (the "Plan").
The outstanding shares of the Company's Common Stock are, and the
shares offered hereby will be, listed on the New York Stock Exchange under
the symbol "CGC." The Market Price (as hereinafter defined) will be equal to
the average of the high and low sales prices of the Company's Common Stock on
the Composite Transactions Tape of the New York Stock Exchange on the
Exchange trading day immediately preceding each Investment Date (as
hereinafter defined). The purchase price per share of Common Stock purchased
in the open market or in negotiated transactions will be the weighted average
price per share at which such shares are purchased by an independent agent
for the Plan with respect to the relevant Investment Date. See Response 9.
_____________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 7, 1995.
<PAGE>
TABLE OF CONTENTS
Page
Incorporation of Certain Documents by Reference. . . . . . . . . . . . .
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of the Plan. . . . . . . . . . . . . . . . . . . . . . . . .
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advantages. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration. . . . . . . . . . . . . . . . . . . . . . . . . . .
Participation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of Common Stock . . . . . . . . . . . . . . . . . . . . .
Optional Cash Payments and Initial Cash Investments . . . . . . . .
Reports to Participants . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certificates for Shares . . . . . . . . . . . . . . . . . . . . . .
Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales or Transfers of Shares. . . . . . . . . . . . . . . . . . . .
Rights Offerings, Stock Dividends or Stock Splits . . . . . . . . .
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Income Tax Aspects. . . . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . .
_________________________
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated in this Prospectus by reference the
following documents and information heretofore filed by the Company with the
Securities and Exchange Commission ("Commission"):
1. Annual Report on Form 10-K for the fiscal year ended December
31, 1994.
2. The description of Common Stock in Exhibit 99 to the Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993.
3. The description of Preferred Stock in Exhibit 3(i) to the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 ("1934 Act") after
the date of this Prospectus and prior to the termination of this offering
shall be deemed to be incorporated in this Prospectus by reference and to be
a part hereof from the date of filing of such documents.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
1934 Act and in accordance therewith files reports, proxy statements, and
other information with the Commission. Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street N.W., Washington,
D.C. 20549; 7 World Trade Center, New York, New York 10048; and 500 West
Madison Street, Chicago, Illinois 60604. Copies of such material can be
obtained at prescribed rates by mail from the Public Reference Section of the
Commission at 450 Fifth Street N.W., Washington, D.C. 20549. Such material
can also be inspected and copied at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The Company will provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request
of any such person, a copy of any or all documents incorporated in this
Prospectus by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to: Mr. J.D. Wessling, Vice
President-Finance, Cascade Natural Gas Corporation, 222 Fairview Avenue
North, Seattle, Washington 98109, telephone (206) 624-3900.
<PAGE>
INTRODUCTION
The Company distributes natural gas to residential, commercial and
industrial customers in the states of Washington and Oregon. It was
incorporated in the state of Washington in 1953, and its executive offices
are located at 222 Fairview Avenue North, Seattle, Washington 98109,
telephone (206) 624-3900.
As of February 28, 1995, the Company had outstanding 135,427 shares
of $.55 cumulative preferred stock, without par value, and 60,000 shares of
7.85% cumulative preferred stock, $1.00 par value ("Preferred Stock"). After
the payment of all preferential dividends on shares of the Preferred Stock,
holders of the Common Stock are entitled to dividends when declared by the
Company's Board of Directors. The Company's bank loan agreements contain
provisions requiring maintenance of a minimum net worth. Under these
provisions, approximately $26,424,000 was available for dividends on the
Common Stock and the Preferred Stock as of January 31, 1995.
DESCRIPTION OF THE PLAN
Following, in question and answer form, is a description of the
provisions of the Plan of the Company. The Plan has been amended to permit
participants to sell shares held in their accounts, subject to applicable
fees, through the Bank of New York ("Agent"), which is acting as
administrator of the Plan. In all other material respects the Plan will
continue to operate as it currently operates. As of February 28, 1995,
748,635 shares of Common Stock have been issued by the Company under the
Plan.
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide record holders of shares of
Common Stock and the Company's eligible residential customers with a
convenient method of purchasing shares of Common Stock and investing cash
dividends and optional cash payments in additional shares of Common Stock,
without payment of any brokerage commission or service charge. Purchases of
newly issued Common Stock under the Plan provide additional equity capital
for the Company.
ADVANTAGES
2. What are the advantages of the Plan?
Participants in the Plan may (a) have cash dividends from their
shares of Common Stock automatically reinvested in additional shares of
Common Stock and, in addition, invest by making optional cash payments of not
less than $50 per investment and up to a maximum of $20,000 per calendar
year, or (b) have cash dividends from only those shares of Common Stock held
in the Plan reinvested, receive cash dividends in the usual manner from those
shares of Common Stock held in certificate form, and, in addition, invest by
making optional cash payments of not less than $50 per investment and up to a
maximum of $20,000 per calendar year. The price of shares of Common Stock
purchased from the Company with reinvested cash dividends or optional cash
payments will be equal to the Market Price (see Response 9 for the definition
of "Market Price").
Eligible residential customers of the Company who do not presently
own shares of Common Stock may become participants in the Plan by making an
initial cash investment of at least $250 (but not more than $20,000) to
purchase shares under the Plan.
No commission or service charge is paid by participants in
connection with purchases under the Plan.
Full investment of dividends and other funds is possible under the
Plan because the Plan permits fractions of shares, as well as full shares, to
be credited to participants' accounts. In addition, dividends on such
fractions, as well as full shares, will be credited to participants'
accounts.
Since the Agent that administers the Plan holds and acts as
custodian of the shares purchased under the Plan, participants may also elect
to deposit certificates for shares of Common Stock held in their name with
the Agent. This feature of the Plan relieves participants of the
responsibility for the safekeeping of certificates and protects against loss,
theft or destruction of such certificates. Regular statements of account
provide simplified record-keeping.
ADMINISTRATION
3. Who administers the Plan for participants?
The Plan is administered by the Agent, whose address and telephone
number are:
Cascade Natural Gas Corporation
c/o The Bank of New York
Dividend Reinvestment
P.O. Box 1958
Newark, NJ 07101-9774
(800) 524-4458
The Agent purchases and holds shares of Common Stock acquired through the
Plan, keeps records, sends quarterly statements of account to participants
and performs other duties relating to the Plan. Shares of Common Stock
purchased under the Plan will be registered in the name of the Agent, as
agent for participants in the Plan.
PARTICIPATION
4. Who is eligible to participate?
All holders of record of shares of Common Stock and all residential
customers of the Company in Washington and Oregon are eligible to participate
in the Plan. Beneficial owners of Common Stock whose shares are registered
in names other than their own, such as in the names of their brokers or other
nominees, must become holders of record by having at least one share
transferred into their own names prior to enrolling in the Plan.
5. How does an eligible applicant participate in the Plan?
Eligible shareholders and customers may join the Plan by completing
and signing an Authorization Form and returning it to the Agent. An
Authorization Form may be obtained at any time by written request to the
Agent at the address set forth in Response 3 or by calling the Agent in New
York at (800) 524-4458. Eligible customers of the Company who are not
already shareholders must include a minimum initial cash investment of at
least $250 with their completed Authorization Forms.
IF YOU ARE ALREADY ENROLLED AND PARTICIPATING IN THE PLAN, YOU NEED
TAKE NO FURTHER ACTION AT THIS TIME.
6. When may an eligible applicant join the Plan?
An eligible shareholder or customer may join the Plan at any time.
If an Authorization Form is received at least ten business days before the
next Investment Date, then any dividend payable on that date and any initial
cash investment or optional cash payment accompanying the Authorization Form
will be invested as of that Investment Date in shares of Common Stock for the
applicant. If the Authorization Form is received by the Agent after the
tenth business day prior to the Investment Date, the reinvestment will not
begin until the following Investment Date.
In the months in which a cash dividend is paid on the Common Stock,
the "Investment Date" is the payment date for the dividend. In other months,
the "Investment Date" is the 15th day of the month, or, if the 15th day is
not a business day, the first business day following the 15th day of the
month. Typically, dividends are paid on approximately February 15, May 15,
August 15 and November 15.
For example, to initially invest a quarterly dividend payable
November 15, the Agent must receive the applicant's Authorization Form, and
any accompanying initial cash investment or optional cash payment, no later
than ten business days prior to November 15. If the Authorization Form is
received after this deadline, the dividend payable on November 15 will be
paid in cash. The Agent will hold any funds received with the Authorization
Form for investment on the next Investment Date, December 15 or the first
following business day, or will return the funds to the applicant if
requested to do so at least five business days prior to the next Investment
Date.
7. How does an eligible applicant complete the Authorization Form?
If an applicant wishes to participate in the automatic dividend
reinvestment feature of the Plan with respect to shares held in certificate
form as well as shares held in the Plan, the applicant must check the box
entitled "Full Dividend Reinvestment" on the Authorization Form. This choice
will be effective for all shares presently or subsequently registered in the
applicant's name. Optional cash payments may also be submitted if this box
is checked.
If an applicant wishes to participate in the automatic dividend
feature of the Plan only with respect to shares held in the Plan and to make
optional cash payments, either at that time or at any time in the future, the
applicant must check the box entitled "Partial Dividend Reinvestment." The
applicant will continue to receive cash dividends in the usual manner from
any shares of Common Stock held in certificate form.
An eligible customer of the Company may direct the Agent to
purchase shares of Common Stock with the minimum initial cash investment of
$250 enclosed with the Authorization Form. Eligible customers may also
select either the "Full Dividend Reinvestment" or the "Partial Dividend
Reinvestment" options.
The Authorization Form should be dated and signed as indicated and
mailed to the Agent at the address set forth in Response 3 together with the
funds for the initial cash investment by an eligible customer and for any
optional cash payment by an eligible shareholder. See Responses 11 through
14 for more information on optional cash payments. Authorization Forms must
be received by the Agent at least ten business days before an Investment
Date.
A participant may change his or her investment options at any time
by requesting a new Authorization Form and returning it to the Agent at the
address set forth in Response 3. A change in the investment option will be
effective on the next Investment Date if the Authorization Form is received
by the Agent at least ten business days before that Investment Date.
PURCHASES OF COMMON STOCK
8. How does the Agent acquire the shares of Common Stock for 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 in 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 change its determination that
shares of Common Stock will be purchased directly from the Company or on the
open market no more than once in any 12-month period and only if the
Company's Board of Directors or Chief Executive Officer determines that such
change is necessary for raising capital or for some other compelling reason,
unless the Company receives a written communication or statement of policy or
other public announcement from the Washington Utilities and Transportation
Commission or the Oregon Public Utility Commission or the staff of either
commission recommending or requiring a change in the capital structure of the
Company.
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 will not be accountable for its inability
to make purchases at such time and any uninvested funds will be promptly
returned to the participant.
9. What will be the purchase price of shares of Common Stock purchased
under the Plan?
The purchase price of the newly issued shares of Common Stock
bought directly from the Company through the Plan will be equal to the
average of the high and low sales prices for the Company's Common Stock
("Market Price") on the Composite Transactions Tape of the New York Stock
Exchange on the date immediately preceding each Investment Date, if that date
is an Exchange trading day, or on the first previous trading day if that date
is not a trading day. If no sales of Common Stock are reported on the
Composite Transactions Tape on such trading day, the Market Price will be
determined by the Company on the basis of such market quotations as it shall
deem appropriate. No shares will be sold under the Plan at less than par
value.
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.
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 business day immediately preceding the relevant
Investment Date and in no event later than 30 days after the relevant
Investment Date, except where and to the extent necessary under any
applicable federal securities laws or other government or stock exchange
regulations. Shares acquired from the Company will be purchased for
participants' accounts as of the close of business on the relevant Investment
Date.
10. How many shares of Common Stock will be purchased for participants?
The number of shares to be purchased depends on the amount of the
participant's initial cash investment, dividends reinvested, and optional
cash payments, and the purchase price of the Common Stock for the relevant
Investment Date. Each participant's account will be credited with that
number of shares, including fractions computed to at least four decimal
places, equal to the total amount of the initial cash investment, dividends
reinvested, and optional cash payments divided by the applicable purchase
price.
OPTIONAL CASH PAYMENTS AND INITIAL CASH INVESTMENTS
11. How do the optional cash payments work?
A participant may make any number of optional cash payments,
provided that each payment is a minimum of $50 (except that an initial
minimum cash investment of $250 must be made by an eligible customer who is
not a shareholder) and all payments, including any initial cash investment,
do not exceed a maximum of $20,000 per calendar year per participant. All
participants who have submitted properly executed Authorization Forms are
eligible to make optional cash payments. See Response 7 for instructions for
the proper completion of the Authorization Form. If a participant sends a
cash payment of less than $50 (or an initial cash investment of less than
$250 in the case of an applicant who is not a shareholder), the payment will
be returned to the participant. The Company will not waive the maximum
amount a participant may contribute under the Plan per calendar year. If a
participant's payments aggregate more than $20,000 in a calendar year, the
amount over $20,000 will be returned to the participant.
12. How are optional cash payments made?
The option to make cash payments is available to each participant
each month. The same amount of money need not be sent each month and there
is no obligation to make an optional cash payment each month.
Optional cash payments and initial cash investments may be made by
personal check or money order payable to the Agent in U.S. dollars. Checks
not drawn on a U.S. bank are subject to collection fees and will be invested
on the first Investment Date after the funds have cleared, provided the funds
clear at least five business days before the Investment Date. Optional cash
payments and initial cash investments should be mailed to the Agent at the
address set forth in Response 3 together with the Voluntary Cash Investment
Form attached to a participant's statement of account (or the Authorization
Form in the case of a new applicant). Cash payments mailed to any other
address are not validly delivered. Additional Voluntary Cash Investment
Forms and Authorization Forms are available upon request from the Agent.
13. When will optional cash payments received by the Company be invested?
All optional cash payments received from participants at least five
business days prior to an Investment Date and from new applicants at least
ten business days prior to an Investment Date will be invested as of that
Investment Date. Payments received from participants after five business
days prior to an Investment Date or from new applicants after ten business
days prior to an Investment Date will be invested as of the following
Investment Date. NO INTEREST WILL BE PAID BY THE COMPANY ON CASH PAYMENTS.
ANY OPTIONAL CASH PAYMENT A PARTICIPANT WISHES TO MAKE MUST BE SENT SO AS TO
REACH THE AGENT PRIOR TO THE APPLICABLE DEADLINE. Investment Dates are
approximately the 15th day of each month. See Response 6.
14. Are there any out-of-pocket costs to the participants in connection with
purchases under the Plan?
No. The Company pays all costs of administration of the Plan.
There are no brokerage fees or commissions charged to participants in
connection with the purchase of shares under the Plan.
REPORTS TO PARTICIPANTS
15. What kind of reports will be sent to participants in the Plan?
Each participant in the Plan will receive a quarterly statement of
account. As soon as practicable after each purchase of additional shares,
the participant will also receive a statement of account. These statements
are a participant's continuing record of the cost of his or her purchases and
should be retained for income tax purposes. In addition, each participant
will receive copies of the same communications sent to every other holder of
shares of Common Stock, including the Company's quarterly reports, annual
report, the notice of annual meeting, and proxy statements for shareholder
meetings.
DIVIDENDS
16. Will participants be credited with dividends on shares held in their
accounts under the Plan?
Yes. The Company pays dividends, as declared, to the record
holders of all its shares of stock. The Company ordinarily pays dividends
quarterly, on approximately February 15, May 15, August 15, and November 15.
As the record holder for participants in the Plan, the Agent, as agent, will
receive dividends for all Plan shares held on the record date. It will
credit such dividends to participants on the basis of full and fractional
shares held in their accounts.
If a participant has elected the "Full Dividend Reinvestment"
option, the cash dividends from all shares of Common Stock held by the
participant, whether in the Plan or in certificate form, will be reinvested
in additional shares of Common Stock to be held in the Plan.
CERTIFICATES FOR SHARES
17. Will certificates be issued for shares of Common Stock purchased under
the Plan?
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 will be shown on the participant's statement of
account. This convenience protects against loss, theft or destruction of
stock certificates.
Certificates for any number of whole shares credited to an account
under the Plan will be issued upon the participant's written request, using
the Voluntary Cash Investment Form attached to the participant's statement of
account. This request should be signed by the participant and mailed to the
Agent at the address set forth in Response 3. Any remaining full shares and
fractions of a share will continue to be credited to the participant's
account until the participant withdraws from the Plan. See Response 19.
Shares credited to the account of a participant under the Plan may
not be pledged. A participant who wishes to pledge such shares must request
that certificates for such shares be issued.
Certificates for fractions of shares will not be issued under any
circumstances.
18. In whose name will certificates be registered when issued?
Accounts of eligible shareholders who join the Plan are maintained
in the names in which their certificates were registered at the time they
joined the Plan. Accounts of eligible customers who join the Plan are
maintained in the names specified in their Authorization Forms.
Consequently, certificates for whole shares will be similarly registered when
issued.
Upon written request, certificates also can be registered and
issued in names other than that of the participant subject to compliance with
any applicable laws and the payment by the participant of any applicable
taxes, provided that the request bears the signature of the participant and
the signature is guaranteed by a commercial bank, trust company or member of
the New York Stock Exchange.
WITHDRAWAL
19. How does a participant withdraw from the Plan?
In order to withdraw from the Plan, a participant must notify the
Agent in writing, using the Voluntary Cash Investment Form attached to the
participant's statement of account, that he or she wishes to withdraw. When
a participant withdraws from the Plan or in the event of termination of the
Plan by the Company, certificates for whole shares credited to his or her
account under the Plan will be issued and a cash payment will be made for any
fraction of a share, at the current Market Price.
20. When may a participant withdraw from the Plan?
A participant may discontinue the automatic reinvestment of
dividends under the Plan and completely withdraw from participation in the
Plan at any time by written notice to that effect to the Agent, using the
Voluntary Cash Investment Form attached to the participant's statement of
account.
An election to discontinue the automatic reinvestment of dividends
and withdraw from the Plan will be deemed to also constitute a request for a
stock certificate for all whole shares held by the Agent for the account of
the participant under the Plan and for cash settlement of any fractional
shares.
If a participant's request to withdraw is received by the Agent at
least five business days before a dividend payment date, the amount of the
dividend will be paid in cash to the participant and all subsequent dividends
will be paid to the participant in cash unless he or she re-enrolls in the
Plan.
If a participant's request to withdraw is received by the Agent
less than five business days before a dividend payment date, the cash
dividend from the participant's shares will be used to purchase shares of
Common Stock under the Plan.
After a participant withdraws from the Plan, he or she may re-
enroll at any time by submitting a new Authorization Form in the same manner
as any new applicant.
SALES OR TRANSFERS OF SHARES
21. What happens when a participant sells or transfers all of the shares
registered in his or her name?
If a participant disposes of all shares of Common Stock registered
in his or her name, the Agent will continue to reinvest the dividends on the
shares credited to the participant's account under the Plan until the
participant notifies the Agent that he or she wishes to withdraw from the
Plan.
22. May a participant request that the shares held in his or her account be
sold?
A participant may submit a written request to the Agent, using the
Voluntary Cash Investment Form attached to the participant's statement of
account, to sell some or all of the shares held in the participant's account
under the Plan. A participant who wishes to submit such a request should
telephone the Agent at (800) 524-4458 for instructions and for information
regarding the Agent's fee for arranging the sale. After the sale, the Agent
will forward a check to participant for the sale proceeds, less the Agent's
fee, any applicable brokerage commission, and transfer and withholding taxes,
if any.
As soon as practicable after a sale of shares, the participant will
receive a statement of account. The sale of all shares in a Plan account
will not constitute a withdrawal from the plan unless specific instructions
are given to terminate the account.
RIGHTS OFFERINGS, STOCK DIVIDENDS OR STOCK SPLITS
23. If the Company has a rights offering, how will a participant's
entitlement be computed?
In the event of a rights offering, the participant will receive
rights based upon the shares held of record in the participant's name and
whole shares credited to his or her account under the Plan. Rights
certificates will not be issued for fractional shares of Common Stock.
24. What happens if the Company issues a stock dividend or declares a stock
split?
For participants in either the "Partial Dividend Reinvestment" or
the "Full Dividend Reinvestment" feature of the Plan, any shares of Common
Stock distributed as a result of a stock dividend or stock split, including
any fractions, on shares registered in their names or held in their Plan
accounts, will be credited to their Plan accounts. Stock dividends and stock
split shares, including a check for any fractional share, will be mailed
directly to those shareholders not participating in the Plan.
VOTING RIGHTS
25. How will a participant's shares be voted at meetings of shareholders?
All shares of Common Stock (including any fractional share) held
for the account of a participant under the Plan may be voted by the
participant at stockholders' meetings in the same manner as shares registered
in his or her name. A proxy form will be sent to each participant with
respect to each stockholders' meeting. When the executed proxy is returned
by the participant, all shares will be voted as directed. If the participant
attends the stockholders' meeting in person, the participant may vote such
shares in person at the meeting, whether or not he or she has sent in the
proxy.
FEDERAL INCOME TAX ASPECTS
26. What are the Federal income tax consequences of participation in the
Plan?
A participant will be treated for Federal income tax purposes as
having received, on the Investment Date, a taxable dividend equal to the full
amount of the cash dividend otherwise payable on such date. In the event the
Company directs the Agent to purchase shares on the open market or in
privately negotiated transactions, participants will be treated as having
received an additional dividend in the amount of the pro rata brokerage fees
paid by the Company. A participant will realize gain or loss when his or her
shares are sold. The amount of gain or loss will be the difference between
the amount the participant receives for the shares and his or her tax basis
for the shares. Such gain or loss will be long-term or short-term capital
gain or loss, depending on the participant's holding period for the shares
and provided that the shares are held as a capital asset. Generally, the tax
basis for shares acquired through either dividend reinvestment or optional
cash payments will be equal to the purchase price for the shares plus any
brokerage commissions paid with respect to the shares, and the holding period
for the shares will begin the day after the shares are credited to the
participant's account.
27. How are income tax withholding provisions applied to foreign
shareholders?
In the case of those foreign shareholders whose dividends on Common
Stock are subject to United States income tax withholding, the amount of
dividends reinvested will be reduced by the amount of the tax to be withheld.
28. How are backup income tax withholding provisions applied to
shareholders?
In the case of shareholders whose dividends on Common Stock are
subject to United States backup income tax withholding, the amount of
dividend reinvested will be reduced by the amount of the tax to be withheld.
Backup withholding applies to certain shareholders who fail to furnish the
Agent with their correct tax identification number (usually, for individuals,
their Social Security numbers), or fail to sign a certificate stating that
they are not subject to backup withholding. Backup withholding also applies
if the Internal Revenue Service notifies the Company that a shareholder has
failed to report dividends or interest on his or her return or that a
shareholder has furnished an incorrect taxpayer identification number.
USE OF PROCEEDS
29. What use will be made of the funds generated by the Plan?
The Company intends to add the proceeds it receives from sales of
its shares to the Plan to the general funds of the Company to be available
for its continuing construction program and other appropriate corporate
purposes. The Company is unable to estimate the amount of the proceeds that
will be devoted to any specific purposes. The funds will increase
shareholders' equity which, in turn, strengthens the Company's overall
financial position. No proceeds will be realized by the Company when shares
of Common Stock are purchased under the Plan in the open market. The Company
does not know either the number of shares that will ultimately be purchased
under the Plan or the prices at which such shares will be sold.
OTHER INFORMATION
30. What are the responsibilities of the Company and the Agent under the
Plan?
Neither the Company nor the Agent, in administering the Plan, will
be liable for any act done in good faith or for any good faith omission to
act, including, without limitation, any claim of liability arising out of
failure to terminate a participant's account upon such participant's death
prior to receipt of notice in writing of such death.
The participant should recognize that the Company cannot assure the
participant of a profit nor protect against a loss with respect to the shares
of Common Stock purchased by the participant under the Plan.
31. May the Plan be changed or discontinued?
The Company reserves the right to suspend, modify or terminate the
Plan at any time. All participants will receive notice of any such
suspension, modification or termination. Upon termination of the Plan by the
Company, certificates for whole shares credited to a participant's account
under the Plan will be issued and a cash payment, valued as described in
Response 19, will be made for any fractional share.
32. Who interprets and regulates the Plan?
The Company reserves the right to interpret and regulate the Plan
as deemed desirable or necessary in connection with its operation.
33. Where should correspondence regarding the Plan be sent?
All correspondence concerning the Plan should be addressed to the
Agent at the address set forth in Response 3.
<PAGE>
(BACK COVER)
No person has been authorized to give any information or to make
any representation not contained in this Prospectus in connection with the
offer made hereby. If given or made, such information or representation must
not be relied upon as having been authorized by the Company. This Prospectus
does not constitute an offer of any securities other than the Common Stock to
which it relates or an offer to any person in any jurisdiction where such an
offer would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication
that the information contained herein is correct as of any time subsequent to
the date hereof.
<PAGE>
