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Filed pursuant to Rule 424(b)(3)
Registration No. 33-52207
PROSPECTUS
HOUSTON INDUSTRIES INCORPORATED
4,000,000 SHARES
COMMON STOCK
INVESTOR'S CHOICE PLAN
Houston Industries Incorporated (the "Company") hereby offers participation
in its Investor's Choice Plan ("Investor's Choice" or the "Plan"). The Plan is
designed to provide investors with a convenient way to purchase shares of the
Company's common stock, without par value ("Common Stock"), and to reinvest all
or a portion of the cash dividends paid and interest payments made on certain
securities of the Company and its subsidiaries (the "Eligible Securities") in
shares of Common Stock. For a listing of Eligible Securities, see "Houston
Industries Incorporated Investor's Choice Plan--Eligible Securities."
PARTICIPANTS IN INVESTOR'S CHOICE MAY:
. Reinvest all or a portion of cash dividends paid or interest payments
made on Eligible Securities registered in their names or Common Stock
credited to their Plan accounts in shares of Common Stock.
. Make an initial investment in Common Stock with a cash payment of at
least $250 or, if already a holder of Eligible Securities, increase their
investment in Common Stock by making optional cash payments at any time
of at least $50 for any single investment, up to a maximum of $120,000
per calendar year.
. Receive, upon written request, certificates for whole shares of Common
Stock credited to their Plan accounts.
. Deposit certificates representing Common Stock into the Plan for
safekeeping.
. Sell shares of Common Stock credited to their Plan accounts through the
Plan.
Shares of Common Stock will be purchased under the Plan, at the option of the
Company, from newly issued shares, shares held in the treasury of the Company
or shares purchased in the open market. Any open market purchases will be
effected through an Independent Agent (as hereinafter defined) selected by the
Company. The Common Stock is listed on the New York, Chicago and London Stock
Exchanges. The closing price of the Common Stock on March 14, 1995 on the New
York Stock Exchange was $38 7/8.
The purchase price of newly issued or treasury shares of Common Stock
purchased under the Plan for an Investment Date (as hereinafter defined) will
be the average of the high and low sales prices of the Common Stock reported on
the New York Stock Exchange Composite Tape as published in The Wall Street
Journal for the trading day preceding that Investment Date. The price of shares
of Common Stock purchased or sold in the open market will be the weighted
average price per share (adjusted for brokerage commissions, any related
service charges and applicable taxes) of the aggregate number of shares
purchased or sold, respectively, in the open market for the relevant period.
There will be no discount from these purchase prices offered for shares of
Common Stock purchased under the Plan. The Company will pay the costs of
administration of the Plan, except that Investor's Choice participants will
bear the cost of brokerage commissions, any related service charges and
applicable taxes relating to shares of Common Stock purchased or sold in the
open market.
To the extent required by applicable law in certain jurisdictions, including
Arizona, Florida, Maine, Nebraska, North Carolina, North Dakota, Oklahoma and
Vermont, shares of Common Stock offered under Investor's Choice to persons not
presently record holders of Common Stock are offered only through a registered
broker/dealer in such jurisdictions.
This Prospectus contains a summary of the material provisions of the Plan
and, therefore, this Prospectus should be retained by participants in the Plan
("Participants") for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is March 15, 1995.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (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.,
Judiciary Plaza, Washington, D.C. 20549, and at the Commission's regional
offices at Northwestern Atrium Center, 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at its principal office at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such reports,
proxy statements and other information concerning the Company may also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005 and the Chicago Stock Exchange, 440 South LaSalle Street,
Chicago, Illinois 60603, on which the Common Stock is listed.
This Prospectus constitutes a part of a registration statement (together with
all amendments and exhibits thereto, the "Registration Statement") filed by the
Company with the Commission under the Securities Act of 1933, as amended
("Securities Act"). As permitted by the rules and regulations of the
Commission, this Prospectus omits certain information contained in the
Registration Statement, and reference is made to the Registration Statement for
further information with respect to the Company and the shares of Common Stock
registered under the Registration Statement. Any statements contained herein
concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-7629), are incorporated by
reference into this Prospectus and shall be deemed to be a part hereof:
(1) the Company's Annual Report on Form 10-K for the year ended December
31, 1994;
(2) the Company's Current Report on Form 8-K dated January 26, 1995; and
(3) the descriptions of each of (a) the Common Stock, which is contained
in the Company's Registration Statement on Form 8-A dated January 14, 1977,
as amended by Form 8 dated July 14, 1986, and (b) the Company's Rights to
Purchase Preference Stock, which is contained in the Company's Registration
Statement on Form 8-A dated July 16, 1990.
All documents subsequently filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the offering of Common Stock made by this Prospectus shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference into 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 other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
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The Company hereby undertakes to provide copies of any or all of the
documents referred to above that have been or may be incorporated by reference
into this Prospectus (not including exhibits to the documents that are
incorporated by reference unless such exhibits are specifically incorporated by
reference into such documents) without charge to each recipient of a copy of
this Prospectus, upon written or oral request of the recipient. Requests for
copies of such documents or for additional information regarding the Plan and
its Administrator should be directed in writing or by telephone to the Investor
Relations Department, Houston Industries Incorporated, P. O. Box 4505, Houston,
Texas 77210, telephone (800) 231-6406 (if calling from outside Texas) or (800)
392-4261 (if calling from inside Texas) (toll-free in either case) or (713)
629-3060.
THE COMPANY AND ITS SUBSIDIARIES
The Company is a holding company operating principally in two business
segments, the electric utility business and the cable television business. The
Company conducts its operations primarily through three subsidiaries: Houston
Lighting & Power Company ("HL&P"), its principal operating subsidiary, KBLCOM
Incorporated ("KBLCOM") and Houston Industries Energy, Inc. ("HI Energy"). The
Company is a holding company as defined in the Public Utility Holding Company
Act of 1935, as amended (the "Holding Company Act"), but is exempt from
regulation as a "registered" holding company under the Holding Company Act.
HL&P is engaged in the generation, transmission, distribution and sale of
electric energy and serves over 1.4 million customers in a 5,000 square-mile
area of the Texas Gulf Coast, including Houston. As of December 31, 1994, the
total assets and common stock equity of HL&P represented 88% of the Company's
consolidated assets and 114% of the Company's consolidated common stock equity,
respectively. For the year ended December 31, 1994, the operations of HL&P
accounted for 114% of the Company's consolidated net income.
The cable television operations of the Company are conducted through KBLCOM
and its subsidiaries. This segment includes five cable television systems
located in four states and a 50% interest in Paragon Communications
("Paragon"), a partnership which owns systems located in seven states. As of
December 31, 1994, KBLCOM's systems served approximately 690,000 basic cable
customers and Paragon served approximately 967,000 basic cable customers.
On January 26, 1995, the Company agreed to sell all of its cable television
operations to Time Warner Inc. Closing of the transaction, which is expected to
occur in the second half of 1995, is conditioned upon, among other things, (i)
the parties obtaining necessary consents of certain franchise authorities and
other governmental entities, (ii) the absence of any change that might have a
material adverse effect on KBLCOM or Time Warner Inc., (iii) the absence of any
material litigation and (iv) the expiration or termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended.
HI Energy participates in domestic and foreign power generation projects and
invests in the privatization of foreign electric utilities.
The address of the principal executive offices of the Company is 5 Post Oak
Park, 4400 Post Oak Parkway, Houston, Texas 77027. Its telephone number is
(713) 629-3000.
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APPLICATION OF PROCEEDS
Since purchases of Common Stock under the Plan may be satisfied by any of (i)
the purchase of new shares of Common Stock issued by the Company, (ii) the
purchase of shares of Common Stock held in the Company's treasury, or (iii) the
purchase of shares of Common Stock in the open market, the number of shares of
Common Stock, if any, that the Company ultimately will sell under Investor's
Choice is not known. If newly issued or treasury shares of Common Stock are
purchased under the Plan, the proceeds from such sales will be used for general
corporate purposes, including, without limitation, the redemption, repayment or
retirement of outstanding indebtedness of the Company or the advance or
contribution of funds to one or more of the Company's subsidiaries to be used
for their general corporate purposes, including, without limitation, the
redemption, repayment or retirement of indebtedness or preferred stock of one
or more of such subsidiaries. The Company will not receive any proceeds when
shares of Common Stock are purchased under the Plan in the open market.
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HOUSTON INDUSTRIES INCORPORATED
INVESTOR'S CHOICE PLAN
PURPOSE
The purpose of Investor's Choice is to provide existing and potential
investors in the Company and its subsidiaries with a convenient way to purchase
shares of Common Stock and to reinvest all or a portion of the cash dividends
paid and interest payments made on Eligible Securities in shares of Common
Stock.
ADVANTAGES
. Interested investors, not already record or registered holders of
Eligible Securities, may become Participants by making an initial minimum
cash investment of at least $250 to purchase Common Stock through the
Plan.
. Record or registered holders of Eligible Securities not already
Participants may become Participants by electing to have dividend and
interest payments on all or a portion of their Eligible Securities
reinvested in Common Stock, depositing certificates representing Common
Stock into the Plan for safekeeping or making an initial minimum cash
investment of at least $50 to purchase Common Stock through the Plan.
. In addition to having their dividend and interest payments on Eligible
Securities reinvested in Common Stock, Participants may invest additional
funds in Common Stock through optional cash investments of at least $50
for any single investment up to $120,000 per calendar year. Optional cash
investments may be made occasionally or at regular intervals, as the
Participant desires.
. Funds invested in the Plan are fully invested in Common Stock through the
purchase of whole shares and fractions of shares, and proportionate cash
dividends on fractions of shares of Common Stock are used to purchase
additional shares of Common Stock.
. Investor's Choice offers a "safekeeping" service whereby Participants may
deposit, free of any service charges, certificates representing Common
Stock held in certificate form into the Plan. Shares of Common Stock so
deposited will be credited to the account of the Participant (an
"Account"). This service can be selected by Participants without
participating in any other feature of the Plan.
. A Participant may direct the Company, at any time and at no cost to the
Participant, to transfer all or a portion of the shares of Common Stock
credited to his Account (including those shares of Common Stock deposited
into the Plan for safekeeping) to the Account of another Participant (or
to set up an Account for a new Participant in connection with such
transfer) or to send certificate(s) representing such shares to the
Participant or another designated person or entity.
. Quarterly statements ("Statements of Account") will be mailed to each
Participant showing all transactions completed during the year to date,
total shares of Common Stock credited to the Participant's Account and
other information related to his Account.
. Participants may direct that all or a portion of their dividend or
interest payments on Eligible Securities, including shares of Common
Stock purchased for a Participant under the Plan and shares of Common
Stock deposited into the Plan for safekeeping, be reinvested in shares of
Common Stock. Dividend and interest payments not reinvested will be paid
in the usual manner.
. Participants may sell shares of Common Stock credited to their Accounts
(including those shares of Common Stock deposited into the Plan for
safekeeping) through the Plan.
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DISADVANTAGES
. A Participant has no control over the price, and, in the case of shares
of Common Stock purchased or sold in the open market by an Independent
Agent, the time, at which Common Stock is purchased or sold,
respectively, for his Account. Purchases in the open market may begin on
the relevant Investment Date and should be completed within 15 days after
that Investment Date. Funds not invested in Common Stock within 30 days
after receipt will be promptly returned to Participants. Sales by
Participants under the Plan will be made by an Independent Agent as soon
as practicable after processing the sales request. Therefore,
Participants bear the market risk associated with fluctuations in the
price of the Common Stock. (See "--Investment Dates," "--Purchases and
Sales of Shares Generally" and "--Sale of Shares of Common Stock.")
. No interest will be paid on funds held by the Administrator (as
hereinafter defined) pending investment under the Plan.
. Optional and initial cash investments must be received by the
Administrator no later than two business days prior to an Investment Date
to be invested beginning on that Investment Date. Otherwise, the
investment may be held by the Administrator and invested beginning on the
next Investment Date. Optional and initial cash investments need not be
returned to Participants unless a written request is received by the
Administrator no later than two business days prior to the applicable
Investment Date. (See "--Initial Cash Investments and Optional Cash
Investments.")
SUMMARY
The following is a summary of the material terms and provisions of Investor's
Choice and does not purport to be a complete description of all terms and
provisions of Investor's Choice. The following summary is qualified in its
entirety by reference to all of the terms and provisions of the Plan, which is
an exhibit to the Registration Statement.
ADMINISTRATION
Administration of the Plan is conducted by the individual (who may be an
employee of the Company), bank, trust company or other entity (including the
Company) appointed from time to time by the Company to act as administrator of
Investor's Choice (the "Administrator"). The Company will be the initial
Administrator. The Administrator is responsible for administering the Plan,
receiving all cash investments made by Participants, maintaining records of
each Participant's Account activities, issuing Statements of Account and
performing other duties required by the Plan. The Administrator or its nominee,
as custodian, will hold one or more certificates registered in its name
representing the aggregate number of whole shares of Common Stock purchased
under, or deposited for safekeeping into, the Plan and credited to
Participants' Accounts. The Administrator will forward funds to be used to
purchase shares of Common Stock in the open market to an agent selected by the
Company (an "Independent Agent") that is an "agent independent of the issuer,"
as that term is defined in the rules and regulations under the Exchange Act.
Additionally, the Administrator will promptly forward sales instructions to the
Independent Agent. The Independent Agent is responsible for purchasing and
selling shares of Common Stock in the open market for Participants' Accounts in
accordance with the provisions of the Plan. Under certain circumstances, the
Administrator may be an Independent Agent. The Company believes that its
serving as Administrator rather than a registered broker-dealer or a federally
insured banking institution poses no material risks to Participants.
Participants may contact the Administrator by writing:
Houston Industries Incorporated
Investor Services Department
P. O. Box 4505
Houston, Texas 77210
or by telephoning toll-free (800) 231-6406 (if calling from outside Texas),
(800) 392-4261 (if calling from within Texas), or, in Houston, (713) 629-3060
between 8 a.m. and 5 p.m., Monday through Friday, Central Time. Written
communications may be sent by telecopier (fax) to (713) 629-3129.
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ELIGIBILITY
Any person or entity, whether or not a record holder of Common Stock, is
eligible to participate in Investor's Choice, provided that (i) such person or
entity fulfills the prerequisites for participation described below under
"Enrollment Procedures" and (ii) in the case of citizens or residents of a
country other than the United States, its territories and possessions,
participation would not violate local laws applicable to the Company, the Plan
and the Participant.
ENROLLMENT PROCEDURES
HOLDERS OF COMMON STOCK CURRENTLY PARTICIPATING IN THE COMPANY'S DIVIDEND
REINVESTMENT PLAN, WHICH IS BEING REPLACED BY INVESTOR'S CHOICE (BY MEANS OF
AMENDMENT AND RESTATEMENT), WILL AUTOMATICALLY BE PARTICIPANTS IN THE PLAN
WITHOUT SENDING IN A NEW ENROLLMENT FORM ("ENROLLMENT FORM"). HOWEVER, A
PARTICIPANT WHO WISHES TO CHANGE HIS PARTICIPATION IN ANY WAY (E.G., FROM
PARTIAL TO FULL REINVESTMENT) MUST SUBMIT A NEW ENROLLMENT FORM.
After being furnished with a copy of this Prospectus, eligible applicants may
join Investor's Choice at any time by completing and signing an Enrollment Form
in the manner set forth below. REQUESTS FOR COPIES OF ENROLLMENT FORMS, AS WELL
AS COPIES OF OTHER INVESTOR'S CHOICE FORMS AND THIS PROSPECTUS, SHOULD BE MADE
IN WRITING OR BY TELEPHONE TO THE ADMINISTRATOR'S ADDRESS AND TELEPHONE NUMBERS
LISTED IN "--ADMINISTRATION" ABOVE. RECORD OR REGISTERED HOLDERS OF ELIGIBLE
SECURITIES SHOULD BE SURE TO SIGN THEIR NAME(S) ON THE ENROLLMENT FORM EXACTLY
AS THEY APPEAR ON THEIR CERTIFICATES OR INSTRUMENTS.
In order to become a Participant in Investor's Choice, an eligible applicant
must complete and sign an Enrollment Form and return it to the Administrator
and (i) elect to have cash dividends paid or interest payments made on Eligible
Securities (see "--Eligible Securities" for a list of Eligible Securities) of
which such applicant is the record or registered holder invested in Common
Stock (see "--Reinvestment of Cash Dividend and Interest Payments"), (ii)
deposit certificates representing shares of Common Stock into the Plan for
safekeeping (see "--Safekeeping Service") or (iii) make an initial cash
investment (see "--Initial Cash Investments and Optional Cash Investments").
Beneficial owners of Eligible Securities registered in "street name" (e.g.,
in the name of a bank, broker, or trustee) may participate in Investor's Choice
with respect to such securities by either (i) transferring those Eligible
Securities which they wish to be subject to the Plan into their own name and
depositing shares of Common Stock into the Plan for safekeeping and/or electing
to reinvest cash dividend or interest payments on such Eligible Securities in
Common Stock (see "--Transfer of Eligible Securities--From a Broker") or (ii)
making arrangements with the record or registered holder (e.g., their bank,
broker or trustee, who will become the Participant) of such securities to
participate in Investor's Choice on the beneficial owner's behalf.
A person will become a Participant after a properly completed Enrollment Form
has been received and accepted by the Administrator.
ELIGIBLE SECURITIES
The following equity and debt securities of the Company and its subsidiaries
are Eligible Securities:
. Common Stock (including shares of Common Stock purchased through the
Plan)
. The Company's Debentures, 7 1/4% Series due December 1, 1996
. The Company's Debentures, 9 3/8% Series due June 1, 2001
. The Company's Debentures, 7 7/8% Series due July 1, 2002
. $4 Preferred Stock of HL&P
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. $6.72 Cumulative Preferred Stock of HL&P
. $7.52 Cumulative Preferred Stock of HL&P
. $8.12 Cumulative Preferred Stock of HL&P
. $8.50 Cumulative Preferred Stock of HL&P
. HL&P's First Mortgage Bonds, 5 1/4% Series due 1996
. HL&P's First Mortgage Bonds, 5 1/4% Series due 1997
. HL&P's First Mortgage Bonds, 6 3/4% Series due 1997
. HL&P's First Mortgage Bonds, 7 5/8% Series due March 1, 1997
. HL&P's First Mortgage Bonds, 6 3/4% Series due 1998
. HL&P's First Mortgage Bonds, 7 1/4% Series due 2001
. HL&P's First Mortgage Bonds, 9.15% Series due March 15, 2021
. HL&P's First Mortgage Bonds, 8 3/4% Series due March 1, 2022
. HL&P's First Mortgage Bonds, 7 3/4% Series due March 15, 2023
. HL&P's First Mortgage Bonds, 7 1/2% Series due July 1, 2023.
In addition, the Company may from time to time designate, in its sole
discretion, other equity or debt securities of the Company and its subsidiaries
as Eligible Securities by notifying the Administrator in writing of such
designation.
INITIAL CASH INVESTMENTS AND OPTIONAL CASH INVESTMENTS
Interested investors, whether or not record or registered holders of Eligible
Securities, may become Participants by making an investment through the Plan as
hereinafter described. ELIGIBLE APPLICANTS WHO ARE NOT RECORD OR REGISTERED
HOLDERS OF ELIGIBLE SECURITIES MUST INCLUDE A MINIMUM INITIAL CASH INVESTMENT
OF AT LEAST $250 WITH THEIR COMPLETED ENROLLMENT FORM. ELIGIBLE APPLICANTS WHO
ARE RECORD OR REGISTERED HOLDERS OF ELIGIBLE SECURITIES MUST INCLUDE A MINIMUM
INITIAL CASH INVESTMENT OF AT LEAST $50 WITH THEIR COMPLETED ENROLLMENT FORM.
Such investments may be made by personal check, money order or wire transfer
payable to Houston Industries Incorporated Investor's Choice Plan. DO NOT SEND
CASH. Interested investors making wire transfers should contact the
Administrator for wire instructions and may be charged fees by the commercial
bank initiating the transfer.
Participants may make optional cash investments by delivering to the
Administrator (a) a completed optional cash investment stub which will be
attached to each Participant's quarterly Statement of Account or an Enrollment
Form and (b) a personal check, money order or wire transfer payable to Houston
Industries Incorporated Investor's Choice Plan. DO NOT SEND CASH. Participants
making wire transfers should contact the Administrator for wire instructions
and may be charged fees by the commercial bank initiating the transfer.
Optional cash investments must be at least $50 for any single investment. There
is no obligation to make any optional cash investment and the amount and timing
of such investments may vary from time to time.
Optional cash investments may not exceed $120,000 in the aggregate per
calendar year (the "Maximum Amount"), which amount may be invested all at one
time. In determining whether the Maximum Amount has been reached, initial
investments will be counted as optional cash investments.
An Investment Date will occur twice every month. (See "--Investment Dates.")
Optional and initial cash investments will be invested in Common Stock
beginning on the first Investment Date following their receipt by the
Administrator; provided, that such investments must be received by the
Administrator no later
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than two business days prior to an Investment Date to be invested beginning on
that Investment Date. Otherwise, the investment may be held by the
Administrator and invested beginning on the next Investment Date. (See "--
Investment Dates" and "--Purchases and Sales of Shares Generally.") NO INTEREST
WILL BE PAID ON FUNDS HELD BY THE ADMINISTRATOR PENDING INVESTMENT.
Accordingly, Participants and interested investors should transmit cash
investments so as to reach the Administrator shortly (but not less than two
business days) before an Investment Date.
Upon a Participant's written request, received by the Administrator no later
than two business days prior to the applicable Investment Date, a cash
investment not already invested in Common Stock will be returned to the
Participant. However, no refund of a check or money order will be made until
the funds from such instruments have been actually collected by the
Administrator. Accordingly, such refunds may be significantly delayed. If the
written request to stop investment is received by the Administrator within two
business days prior to an Investment Date, any cash investment then held by the
Administrator will be invested in Common Stock on such Investment Date.
Optional and initial cash investments, pending investment pursuant to
Investor's Choice, will be credited to a Participant's Account and held in a
trust account which will be separated from any other funds or monies of the
Company. Cash investments not invested in Common Stock within 30 days of
receipt will be promptly returned to the Participant. All cash investments are
subject to collection by the Administrator of full face value in U. S. funds.
The method of delivery of any cash investment is at the election and risk of
the Participant or interested investor and will be deemed received when
actually received by the Administrator. If the delivery is by mail, it is
recommended that the Participant or interested investor use properly insured,
registered mail with return receipt requested, and that the mailing be made
sufficiently in advance of the Investment Date.
Cash dividends paid on shares of Common Stock credited to a Participant's
Account that were purchased through the Plan with optional and initial cash
investments will be reinvested in shares of Common Stock in accordance with the
Participant's reinvestment election designated on an optional cash investment
stub or completed Enrollment Form, as the case may be.
Funds payable to a Participant or an interested investor as a result of the
redemption, tender or maturity, including accrued interest and premium, if any,
of any of the Eligible Securities of which such Participant or interested
investor is the record or registered holder may be invested in Common Stock
through Investor's Choice at the request of such holder by delivering a
properly completed Enrollment Form covering such Eligible Securities to the
Administrator. Any amounts invested in Common Stock through the Plan as
described in the previous sentence will be treated as optional cash investments
in determining whether the Maximum Amount has been reached.
REINVESTMENT OF CASH DIVIDEND AND INTEREST PAYMENTS
Participants may elect to invest in Common Stock by reinvesting all or a
portion of cash dividends paid and interest payments made on all or a portion
of Eligible Securities registered in their names, Common Stock purchased
through the Plan and credited to their Accounts and Common Stock deposited into
the Plan for safekeeping, by designating such election on their Enrollment
Form. If a Participant does not make an election, cash dividends paid on shares
of Common Stock credited to a Participant's Account that were purchased through
the Plan or deposited into the Plan for safekeeping will be paid in cash.
Participants electing partial reinvestment of cash dividend and interest
payments on any Eligible Securities must designate the specific security for
which such partial reinvestment is desired and the whole dollar amount or whole
number of shares for which reinvestment is desired. Once a Participant elects
reinvestment, cash dividend and interest payments made on the designated
Eligible Securities will be reinvested in shares of Common Stock. THE AMOUNT SO
REINVESTED WILL BE REDUCED BY ANY AMOUNT WHICH IS REQUIRED TO BE WITHHELD UNDER
ANY APPLICABLE TAX OR OTHER STATUTES. If the Participant has specified partial
reinvestment, that portion of cash dividend and interest payments not
designated for reinvestment will be sent to the Participant by check in
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the usual manner or with regard to the partial reinvestment of cash dividends
on Common Stock credited to the Participant's Account, by electronic direct
deposit, if the Participant has elected the direct deposit option (see "--
Direct Deposit of Dividends Not Reinvested").
Dividends and interest payments will be invested in Common Stock beginning
either on the date of payment, if such payment date is an Investment Date, or
on the first Investment Date following such payment. (See "--Investment Dates"
and "--Purchases and Sales of Shares Generally.") Dividend and interest
payments not invested in Common Stock within 30 days of receipt will be
promptly returned to the Participant. Cash dividend and interest payment
reinvestment amounts, pending investment pursuant to Investor's Choice, will be
credited to a Participant's Account and held in a trust account which will be
separated from any other funds or monies of the Company. INTEREST PAYMENTS ON
DEBT ELIGIBLE SECURITIES ARE GENERALLY MADE ON THE 1ST OR 15TH DAY OF THE
RELEVANT MONTH, WHILE THE INVESTMENT DATES ARE GENERALLY THE 10TH AND 25TH DAY
OF THE MONTH. (See "--Investment Dates.") NO INTEREST WILL BE PAID ON SUCH
FUNDS HELD BY THE ADMINISTRATOR PENDING INVESTMENT.
CHANGING PLAN OPTIONS
A Participant may change his Investor's Choice options, including (i)
changing the reinvestment level (i.e., full, partial or none) of cash dividend
and interest payments on Eligible Securities and (ii) changing the designation
of Eligible Securities on which cash dividend or interest payments are subject
to reinvestment, by delivering written instructions or a new Enrollment Form to
that effect to the Administrator. To be effective with respect to a particular
cash dividend or interest payment, any such instructions must be received by
the Administrator on or before the record date relating to such cash dividend
or interest payment. If such instructions are not received by the Administrator
on or before the record date, the instructions will not become effective until
after such dividend or interest is paid. The shares of Common Stock purchased
with such funds will be credited to the Participant's Account.
DIRECT DEPOSIT OF DIVIDENDS NOT REINVESTED
A Participant who elects not to reinvest all cash dividends on shares of
Common Stock credited to his Account may receive such nonreinvested cash
dividends by electronic deposit to the Participant's predesignated bank,
savings, or credit union account. To receive a direct deposit of funds,
Participants must complete and sign a Direct Deposit Authorization Form and
return it to the Administrator. Direct deposit will become effective as
promptly as practicable after receipt of a completed Direct Deposit
Authorization Form. Changes in designated direct deposit accounts may be made
by delivering a completed Direct Deposit Authorization Form to the
Administrator.
Cash dividends on shares of Common Stock not designated for reinvestment and
not directly deposited will be paid by check on the applicable Dividend Payment
Date (as hereinafter defined).
INVESTMENT DATES
An "Investment Date" under the Plan will be, (i) in any month in which a cash
dividend on the Common Stock is paid (a "Dividend Payment Date"), normally the
10th day of March, June, September and December of each year, such Dividend
Payment Date and the 25th day of the month or, if the 25th day is not a
business day, the business day immediately preceding the 25th day of such
month, and (ii) in any month in which no Dividend Payment Date occurs, the 10th
and 25th day of the month or, if that day is not a business day, the business
day immediately preceding that day.
PURCHASES AND SALES OF SHARES GENERALLY
Shares of Common Stock purchased for Participants under the Plan will be
either newly issued shares or shares held in the treasury of the Company or, at
the Company's option, shares of Common Stock purchased in the open market by an
Independent Agent. The primary consideration in determining the source
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<PAGE>
of shares of Common Stock to be used for purchases under the Plan is expected
to be the Company's need to increase equity capital. If the Company does not
need to raise funds externally or if financing needs are satisfied using non-
equity sources of funds to maintain the Company's targeted capital structure,
shares of Common Stock purchased for Participants under the Plan will be
purchased in the open market, subject to the limitation discussed below for
changing the source of shares of Common Stock. As of the date of this
Prospectus, shares of Common Stock purchased for Participants under the Plan
are being purchased in the open market by an Independent Agent. The Plan limits
the Company from changing its determination regarding the source of purchases
of the shares (i.e., from the Company or in the open market) more than once in
any 12-month period. At any time that shares of Common Stock are purchased for
Participants under the Plan in the open market, the Company will not exercise
its right to change the source of purchases of shares of Common Stock absent a
determination by the Company's Board of Directors or Finance Committee of the
Board of Directors that the Company has a need to increase equity capital or
there is another compelling reason for such change.
Purchases of shares of Common Stock from the Company, whether newly issued or
treasury shares, will be made on the relevant Investment Date at the average of
the high and low sales prices of the Common Stock reported on the New York
Stock Exchange Composite Tape as published in The Wall Street Journal for the
trading date preceding the Investment Date. In the event no trading is reported
for the trading day, the purchase price may be determined by the Company on the
basis of such market quotations as it deems appropriate. No brokerage
commissions will be charged on shares acquired directly from the Company.
Purchases in the open market may begin on the relevant Investment Date and
should be completed no more than 15 days after that Investment Date. Funds not
invested in Common Stock within 30 days of receipt will be promptly returned to
Participants. The price of any shares of Common Stock purchased or sold in the
open market for Participants will be the weighted average price per share
(ADJUSTED FOR BROKERAGE COMMISSIONS, ANY RELATED SERVICE CHARGES AND APPLICABLE
TAXES) of the aggregate number of shares purchased or sold, as the case may be,
for the relevant Investment Date or period, respectively.
The number of shares (including any fraction of a share rounded to three
decimal places) of Common Stock credited to the Account of a Participant for a
particular Investment Date will be determined by dividing the total amount of
cash dividends, interest payments, optional cash investments and/or initial
cash investments to be invested for such Participant on such Investment Date by
the relevant purchase price per share.
With regard to open market purchases and sales of shares of Common Stock by
an Independent Agent, none of the Company, the Administrator (if it is not also
the Independent Agent) or any Participant will have any authority or power to
direct the time or price at which shares may be purchased or sold, the markets
on which the shares are to be purchased or sold (including on any securities
exchange, in the over-the-counter market or in negotiated transactions), or the
selection of the broker or dealer (other than any Independent Agent) through or
from whom purchases and sales may be made. The Independent Agent may commingle
each Participant's funds with those of other Participants for the purpose of
executing purchase and sale transactions. Dividend and voting rights will
commence upon settlement, whether shares are purchased from the Company or any
other source.
SAFEKEEPING SERVICE
At the time of enrollment, or at any later time, Participants may take
advantage of the Plan's cost-free safekeeping services. Common Stock held in
certificate form by a Participant may be deposited into the Plan, to be held by
the Administrator or its nominee, by delivering a completed Enrollment Form and
such certificates to the Administrator. Such certificates should not be
endorsed. The shares of Common Stock so deposited will be transferred into the
name of the Administrator or its nominee, as custodian, and credited to the
Participant's Account. Thereafter, such shares of Common Stock will be treated
in the same manner as shares of Common Stock purchased under the Plan and
credited to the Participant's Account. References
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<PAGE>
herein to shares of Common Stock credited to a Participant's Account will
include shares of Common Stock deposited into the Plan for safekeeping unless
otherwise indicated. Cash dividends paid on shares of Common Stock credited to
a Participant's Account that were deposited into the Plan for safekeeping will
be reinvested in shares of Common Stock in accordance with the Participant's
reinvestment election designated on his Enrollment Form.
SALE OF SHARES OF COMMON STOCK
A Participant may request, at any time, that all or a portion of the shares
of Common Stock credited to his Account be sold by delivering to the
Administrator a completed Sale/Transfer/Withdrawal Request Form. ONLY WHOLE
SHARES OF COMMON STOCK CREDITED TO A PARTICIPANT'S ACCOUNT MAY BE SOLD UNDER
THE PLAN. The Administrator will forward the sale instructions to an
Independent Agent within five business days of receipt (except as described in
the following paragraph). An Independent Agent will sell such shares as soon as
practicable after processing the request and will transmit to the Participant
the proceeds of the sale (less brokerage fees and commissions and any transfer
taxes). (See "--Purchases and Sales of Shares Generally" for the applicable
sales price.) Proceeds of shares of Common Stock sold through Investor's Choice
will be paid to the Participant by check.
If instructions for the sale of shares of Common Stock on which cash
dividends are not being reinvested are received by the Administrator on or
after the record date relating to a Dividend Payment Date but before the
Dividend Payment Date, the sale will be processed as described above and a
separate check for the dividends will be mailed to the Participant following
the Dividend Payment Date or will be directly deposited into the Participant's
designated direct deposit account, as applicable. If instructions for the sale
of shares of Common Stock on which cash dividends are being reinvested are
received by the Administrator on or after the record date relating to a
Dividend Payment Date but before the Dividend Payment Date, the dividends paid
on the Dividend Payment Date will be invested in Common Stock through the Plan,
and (i) if the Participant's sale instructions cover less than all of the
shares of Common Stock credited to his Account, the sale will be processed as
described above in the immediately preceding paragraph and the newly purchased
shares will be credited to his Account or (ii) if the Participant's sale
instructions cover all of the shares of Common Stock credited to his Account,
the sale instructions will not be processed until after the dividends have been
invested in Common Stock through the Plan at which time all of the shares
credited to his Account, including the newly purchased shares, will be sold and
the proceeds transmitted to the Participant. (See "-- Reinvestment of Dividends
on Remaining Shares" for the reinvestment level of dividends on shares of
Common Stock credited to a Participant's Account after a sale.)
WITHDRAWAL OF SHARES OF COMMON STOCK
A Participant may withdraw some or all of the Common Stock credited to his
Account from the Plan at any time by delivering to the Administrator (i)
appropriate instructions, if the Participant will be the record holder of such
Common Stock after withdrawal, or (ii) a completed Sale/Transfer/Withdrawal
Request Form and a stock assignment (stock power), if the Participant will not
be the record holder of the Common Stock after withdrawal. Upon the
Administrator's receipt of the proper documentation, certificates representing
the designated Common Stock will be sent to the Participant, the Participant's
broker or any other person that the Participant has designated.
If a completed Sale/Transfer/Withdrawal Request Form with regard to shares of
Common Stock credited to a Participant's Account on which cash dividends are
not being reinvested is received on or after the record date relating to a
Dividend Payment Date but before the Dividend Payment Date, the withdrawal will
be processed as described above and a separate check for the dividends will be
mailed to the Participant following the Dividend Payment Date or will be
directly deposited into the Participant's designated direct deposit account, as
applicable. If a completed Sale/Transfer/Withdrawal Request Form with regard to
shares of Common Stock credited to a Participant's Account on which cash
dividends are being reinvested is received by the Administrator on or after the
record date relating to a Dividend Payment Date but before the Dividend Payment
Date, the dividends paid on the Dividend Payment Date will be invested in
Common
12
<PAGE>
Stock through the Plan, and (i) if the Participant's withdrawal instructions
cover less than all of the shares of Common Stock credited to his Account, the
withdrawal will be processed as described above in the immediately preceding
paragraph and the newly purchased shares will be credited to his Account or
(ii) if the Participant's withdrawal instructions cover all of the shares of
Common Stock credited to his Account, the withdrawal instructions will not be
processed until after the dividends have been invested in Common Stock through
the Plan, at which time certificates representing all of the shares credited to
his Account, including the newly purchased shares, will be sent to the
Participant or other designated recipient. (See "--Reinvestment of Dividends on
Remaining Shares" for the reinvestment level of dividends on shares of Common
Stock credited to a Participant's Account after a withdrawal.)
Certificates representing whole shares of Common Stock withdrawn from the
Plan will be sent to the Participant or designated recipient by First Class
Mail as soon as practicable following the Administrator's receipt of the
required documentation, subject to the provisions of the preceding paragraph.
Withdrawal of shares of Common Stock does not affect reinvestment of cash
dividends on the shares withdrawn unless (i) the Participant is no longer the
record holder of such shares, (ii) the reinvestment is specifically
discontinued by the Participant (see "--Changing Plan Options") or (iii) the
Participant terminates his participation in the Plan (see "--Termination of
Participation by a Participant").
TRANSFER OF ELIGIBLE SECURITIES
From a Broker--Owners of Eligible Securities held beneficially in "street
name" may participate in Investor's Choice with respect to such securities by
either (i) transferring those Eligible Securities which they wish to be subject
to the Plan into their own name and depositing shares of Common Stock into the
Plan for safekeeping and/or electing to reinvest cash dividend or interest
payments on such Eligible Securities in Common Stock or (ii) making
arrangements with the record or registered holder (e.g, their bank, broker or
trustee, who will become the Participant) of such securities to participate in
Investor's Choice on the beneficial owner's behalf. In order to transfer such
securities under clause (i), a Participant must instruct the "street name"
holder to transfer the Eligible Securities to the Participant or in the case of
Common Stock to be deposited into the Plan for safekeeping, to the
Administrator for credit to the Participant's Account. If the person is already
a Participant, the Eligible Securities must be transferred to the Participant
in the same name in which the Participant's Account is registered. If the
person does not have an Account, participation in Investor's Choice will
commence when the Eligible Securities are registered in his name AND a properly
completed Enrollment Form is received by the Administrator.
To a Broker--A Participant wishing to transfer all or any part of the shares
of Common Stock credited to his Account to a brokerage account may do so by
delivering to the Administrator a completed Sale/Transfer/Withdrawal Request
Form and a stock assignment (stock power), acceptable to the Administrator. The
completed Sale/Transfer/Withdrawal Request Form must specify the whole number
of shares of Common Stock, if less than all of such shares credited to his
Account and the name and address of the brokerage firm to which the shares are
to be transferred, including the name of the specific broker handling the
account and the broker's telephone number. The transfer will be handled as
described in "--Withdrawal of Shares of Common Stock" above.
Gift or Transfer of Shares of Common Stock Within Investor's Choice--If a
Participant wishes to transfer, whether by gift, private sale or otherwise,
ownership of all or a part of the shares of Common Stock credited to his
Account to the Account of another Participant or to establish by such transfer
an Account for a person or entity not already a Participant, the Participant
may do so by delivering to the Administrator a completed
Sale/Transfer/Withdrawal Request Form and a stock assignment (stock power). The
transfer will be effected as soon as practicable following the Administrator's
receipt of the required documentation, subject to the provisions of the second
paragraph under "--Withdrawal of Shares of Common Stock." No fraction of a
share of Common Stock credited to a Participant's Account may be transferred
unless the Participant's entire Account is transferred. Requests for
interaccount transfers are subject to the same requirements as for the transfer
of securities generally, including the requirement of a guarantee of signature
on the stock assignment.
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<PAGE>
Stock power forms are available at local banks, brokerage firms and from the
Administrator. (See "--Reinvestment of Dividends on Remaining Shares" for the
reinvestment level of dividends on shares of Common Stock credited to a
Participant's Account after a transfer.)
Shares of Common Stock so transferred will be credited to the transferee's
Account. Unless a transferee who is already a Participant otherwise directs the
Administrator in writing by completion of an Enrollment Form, the reinvestment
of cash dividends on the transferred shares will be made in proportion to the
reinvestment level (i.e., full, partial or none) of the other shares of Common
Stock credited to the transferee's Account. If the transferee is not already a
Participant, an Account will be opened in the transferee's name and he may make
elections with regard to reinvestment of cash dividends on such transferred
shares and other services provided by Investor's Choice on the Enrollment Form
that is provided to him. Unless otherwise requested by the transferor,
transferees will be sent a Statement of Account showing the transfer of such
shares into their Accounts. The transferor may request that such Statement of
Account be returned to the transferor for personal delivery and/or that a gift
certificate be provided. The transferor may send the gift certificate directly
or request that it be sent by the Administrator to the transferee with the
first Statement of Account.
REINVESTMENT OF DIVIDENDS ON REMAINING SHARES
If a Participant is reinvesting cash dividends paid on only a portion of the
shares of Common Stock credited to his Account through the Plan and the
Participant elects to sell, withdraw or transfer a portion of such shares, cash
dividends on the remainder of the shares credited to his Account, up to the
number of shares designated for reinvestment prior to such sale, withdrawal or
transfer, will continue to be reinvested through the Plan, except where the
Participant gives specific instructions to the contrary in connection with such
sale, withdrawal or transfer. For example, if a Participant who had elected to
have cash dividends reinvested through the Plan on 50 shares of a total of 100
shares of Common Stock credited to his Account elected to sell, withdraw or
transfer 25 shares, cash dividends on 50 shares of the remaining 75 shares
credited to his Account would be reinvested through the Plan. If instead the
Participant elected to sell, withdraw or transfer 75 shares, cash dividends on
the remaining 25 shares credited to his Account would be reinvested through the
Plan.
REPORTS TO PARTICIPANTS
Each Participant will receive a quarterly Statement of Account showing all
transactions for the Participant's Account during the current calendar year,
the number of shares of Common Stock credited to the Account, the amount of
cash held in the Account and other information for the Account. Supplemental
Statements of Account will be provided in months where the Participant has made
an optional cash investment, deposited, transferred or withdrawn shares of
Common Stock or had cash dividend or interest payments reinvested in Common
Stock. The Administrator also will send each Participant a confirmation
promptly after each sale of Common Stock under the Plan. Participants should
retain these Statements of Account and confirmations in order to establish the
cost basis, for tax purposes, for shares of Common Stock acquired under
Investor's Choice.
Participants will receive copies of all communications sent to holders of
Common Stock. This may include quarterly reports to shareholders, annual
reports to shareholders, proxy material, consent solicitation material and
Internal Revenue Service information, if appropriate, for reporting dividend
income. All notices, Statements of Account and other communications from the
Administrator to Participants will be addressed to the latest address of
record; therefore, it is important that Participants promptly notify the
Administrator of any change of address.
CERTIFICATES FOR SHARES
A Participant may obtain, free of charge at any time, a certificate for all
or a part of the whole shares of Common Stock credited to his Account upon
written request to the Administrator. Such certificate(s) will be
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<PAGE>
mailed by First Class Mail, within two business days of the Administrator's
receipt of the written request, to the Participant's address of record. Any
remaining whole or fractions of shares of Common Stock will continue to be
credited to the Participant's Account.
Except for transfers described in "--Transfer of Shares of Common Stock,"
shares of Common Stock credited to a Participant's Account may not be pledged
or assigned. A Participant who wishes to pledge or assign shares of Common
Stock must request that they be withdrawn from the Plan. (See "--Withdrawal of
Shares of Common Stock.")
Certificates for fractions of shares of Common Stock will not be issued under
any circumstances.
TERMINATION OF PARTICIPATION BY A PARTICIPANT
A Participant may at any time terminate his participation in the Plan by
delivering a completed Sale/Transfer/Withdrawal Request Form to the
Administrator to that effect. Upon the Administrator's receipt of such written
notification, the Participant will receive (i) a certificate for all of the
whole shares of Common Stock credited to his Account, (ii) any dividends,
interest payments and cash investments credited to his Account and (iii) a
check for the cash value of any fraction of a share of Common Stock credited to
his Account. Such fraction of a share will be valued at the average of the high
and low sales prices of the Common Stock reported on the New York Stock
Exchange Composite Tape as published in The Wall Street Journal for the trading
day preceding the date of receipt of a completed Sale/Transfer/Withdrawal
Request Form.
COSTS
The Company will pay all administrative costs and expenses associated with
Investor's Choice. PARTICIPANTS WILL BEAR THE COST OF BROKERAGE COMMISSIONS,
RELATED SERVICE CHARGES AND ANY APPLICABLE TAXES INCURRED ON ALL SALES AND
PURCHASES OF SHARES OF COMMON STOCK MADE IN THE OPEN MARKET. Such costs will be
included as adjustments to sales and purchase prices. It is estimated at this
time that such brokerage commissions and related service charges will not
exceed ten cents per share. As of the date of this Prospectus, shares of Common
Stock purchased for Participants under the Plan are being purchased in the open
market by an Independent Agent. There will be no brokerage commissions or
related service charges for shares of Common Stock purchased directly from the
Company.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING DISCUSSION RELATES TO THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF PARTICIPATION IN INVESTOR'S CHOICE. THE EFFECT OF SUCH TAX
CONSEQUENCES UPON ANY PARTICIPANT WILL DEPEND UPON SUCH PARTICIPANT'S
INDIVIDUAL CIRCUMSTANCES WHICH, TOGETHER WITH THE STATE AND LOCAL TAX
CONSEQUENCES OF PARTICIPATION, SHOULD BE DISCUSSED BY EACH PARTICIPANT WITH HIS
TAX ADVISOR.
A Participant will be required to include in income for federal income tax
purposes amounts reinvested in Common Stock in respect of dividends and
interest (including any original issue discount) on his Eligible Securities
subject to the Plan and all shares of Common Stock credited to his Account
under the Plan in the manner which would be required if he directly received
such dividends and interest even though no such amount is actually received by
the Participant in cash, but instead is applied to the purchase of shares of
Common Stock for the Participant's Account.
A Participant's tax basis for shares of Common Stock purchased pursuant to
the Plan will be equal to the cost of such shares as discussed above (which
cost in the case of shares purchased in the open market may include amounts in
respect of brokerage commissions, service charges and any applicable taxes).
Such shares of Common Stock will have a holding period beginning on the day
after the shares are allocated to the Participant's Account.
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A Participant will not realize any taxable income when he receives
certificates for whole shares credited to his Account under the Plan. Gain or
loss will be recognized by the Participant when he sells such whole shares and
will be recognized by a Participant when a fractional share credited to his
Account is sold pursuant to the terms of the Plan.
MISCELLANEOUS
Stock Splits, Stock Dividends and Rights Offerings
Any shares or other securities representing stock splits or noncash
distributions on shares of Common Stock credited to the Account of a
Participant will be credited to the Participant's Account. Stock splits,
combinations, recapitalization and similar events affecting shares of Common
Stock credited to a Participant's Account will be credited to the Participant's
Account on a pro rata basis.
In the event of a rights offering, a Participant will receive rights based
upon the total number of whole shares of Common Stock credited to his Account.
Voting of Proxies
A Participant will have the exclusive right to exercise all voting rights
respecting shares of Common Stock credited to his Account. The Administrator
will forward all shareholder materials relating to shares of Common Stock
credited to a Participant's Account to the Participant. A Participant may vote
any whole shares of Common Stock credited to his Account in person or by proxy.
A Participant's proxy card will include whole shares of Common Stock credited
to his Account and shares of Common Stock registered in his name. Shares of
Common Stock credited to a Participant's Account will not be voted unless the
Participant or his proxy votes them. Fractions of shares of Common Stock may
not be voted.
Limitation of Liability
The Plan provides that neither the Company, the Administrator (including the
Company if it is acting as such) in administering Investor's Choice nor any
Independent Agent will be liable for any act done in good faith or for the good
faith omission to act in connection with the Plan, 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, or with respect to the prices at which shares of
Common Stock are purchased or sold for the Participant's Account and the times
when such purchases and sales are made, or with respect to any loss or
fluctuation in the market value after the purchase or sale of such shares.
However, nothing contained in this provision affects a Participant's right to
bring a cause of action based on alleged violations of federal securities laws.
Interpretation and Regulation of Investor's Choice
The officers of the Company are authorized to take such actions to carry out
Investor's Choice as may be consistent with the Plan's terms and conditions.
The Company reserves the right to interpret and regulate the Plan as the
Company deems desirable or necessary in connection with the Plan's operations.
Change or Termination of Investor's Choice
The Company may suspend, modify or terminate Investor's Choice at any time,
in whole, in part or in respect of Participants in one or more jurisdictions,
without the approval of Participants. Notice of such suspension, modification
or termination will be sent to all affected Participants, who will in all
events have the right to withdraw from participation. Upon any whole or partial
termination of Investor's Choice by the Company, each affected Participant will
receive (i) a certificate for all of the whole shares of Common Stock credited
to his Account, (ii) any dividends, interest payments and cash investments
credited to his Account and (iii) a check for the cash value for any fraction
of a share of Common Stock credited to his Account.
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Such fraction of a share shall be valued at the average of the high and low
sales prices of the Common Stock reported on the New York Stock Exchange
Composite Tape as published in The Wall Street Journal for the trading day
preceding the date of termination.
Termination of Participation by the Company
If a Participant does not have at least one whole share of Common Stock
credited to his Account, or does not own any Eligible Securities for which cash
dividends or interest payments are designated for reinvestment pursuant to the
Plan, the Participant's participation in the Plan may be terminated by the
Company upon written notice to the Participant. Additionally, the Company may
terminate any Participant's participation in the Plan after written notice
mailed in advance to such Participant at the address appearing on the
Administrator's records. A Participant whose participation has been terminated
will receive (i) a certificate for all of the whole shares of Common Stock
credited to his Account, (ii) any dividends, interest payments and cash
investments credited to his Account and (iii) a check for the cash value of any
fraction of a share of Common Stock credited to his Account. Such fraction of a
share shall be valued at the average of the high and low sales prices of the
Common Stock reported on the New York Stock Exchange Composite Tape as
published in The Wall Street Journal for the trading day preceding the date of
termination.
PLAN OF DISTRIBUTION
The Common Stock being offered hereby is offered pursuant to the Plan, the
terms of which provide for the purchase of shares of Common Stock, either newly
issued shares or shares held in the treasury of the Company, directly from the
Company, or, at the Company's option, by an Independent Agent on the open
market. As of the date of this Prospectus, shares of Common Stock purchased for
Participants under the Plan are being purchased in the open market by an
Independent Agent. The Plan provides that the Company may not change its
determination regarding the source of purchases of shares under the Plan more
than once in any 12-month period. The primary consideration in determining the
source of shares of Common Stock to be used for purchases under the Plan is
expected to be the Company's need to increase equity capital. If the Company
does not need to raise funds externally or if financing needs are satisfied
using non-equity sources of funds to maintain the Company's targeted capital
structure, shares of Common Stock purchased for Participants under the Plan
will be purchased in the open market, subject to the aforementioned limitation
on changing the source of shares of Common Stock.
The Company will pay all administrative costs and expenses associated with
Investor's Choice. Participants will bear the cost of brokerage commissions,
related service charges and any applicable taxes incurred on all sales and
purchases of shares of Common Stock made in the open market. Such costs will be
included as adjustments to sales and purchase prices. It is estimated at this
time that such brokerage commissions and related service charges will not
exceed ten cents per share. There will be no brokerage commissions or related
service charges for shares of Common Stock purchased directly from the Company.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 400,000,000 shares of
Common Stock and 10,000,000 shares of Preference Stock, without par value
("Preference Stock"), of which 2,000,000 shares have been designated by the
Board of Directors of the Company as Series A Preference Stock ("Series A
Preference Stock"). Each share of Common Stock offered hereby includes an
associated preference stock purchase right (a "Right"). The shares of Series A
Preference Stock have been initially reserved for issuance upon exercise of the
Rights. The descriptions of each of the Common Stock and the Rights are
incorporated by reference into this Prospectus. See "Incorporation of Certain
Documents by Reference" for information on how to obtain a copy of these
descriptions. No shares of Preference Stock are currently outstanding. At March
1, 1995, there were 131,336,234 shares of Common Stock issued and outstanding.
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EXPERTS
The consolidated financial statements and the related financial statement
schedules of the Company and its subsidiaries included in the Company's Annual
Report on Form 10-K, which is incorporated herein by reference, have been
audited by Deloitte & Touche LLP, Independent Auditors, as stated in their
report appearing therein. Such financial statements and financial statement
schedules are incorporated herein by reference in reliance on such report given
upon the authority of that firm as experts in accounting and auditing.
LEGAL OPINIONS
Certain legal matters in connection with the Common Stock offered hereby have
been passed upon for the Company by Baker & Botts, L.L.P., Houston, Texas.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTA-TIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR
OF THE PLAN SINCE THE DATE OF THIS PROSPECTUS OR THAT THE INFORMATION SET
FORTH HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THE
DATE OF FILING OF ANY DOCUMENTS INCORPORATED BY REFERENCE HEREIN.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company and its Subsidiaries........................................... 3
Application of Proceeds.................................................... 4
Houston Industries Incorporated
Investor's Choice Plan.................................................... 5
Plan of Distribution....................................................... 17
Description of Capital Stock............................................... 17
Experts.................................................................... 18
Legal Opinions............................................................. 18
</TABLE>
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HOUSTON
[LOGO] INDUSTRIES
INCORPORATED
4,000,000 Shares
Common Stock
(without par value)
----------------------
PROSPECTUS
----------------------
INVESTOR'S
CHOICE
PLAN
March 15, 1995
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