<PAGE>
Prospectus Supplement Filed pursuant to rule 424(b)(2)
(To Prospectus Dated February 4, 1994) File No.33-51917
120,000 Shares
Elizabethtown Water Company
$5.90 Cumulative Preferred Stock
($100 Par Value)
Dividends on the preferred stock offered hereby (the "New Preferred
Stock") will be cumulative from the date of original issue, payable quarterly
on March 1, June 1, September 1 and December 1 of each year, commencing June
1, 1994.
The New Preferred Stock is not redeemable at the option of the Company
at any time. The Company is required to redeem all 120,000 shares of the New
Preferred Stock on March 1, 2004 at a mandatory redemption price of $100 per
share, plus unpaid accrued dividends to such date. See "Supplemental
Description of the New Preferred Stock -- Redemption Provisions".
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 COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public <F1> Commission <F2> Company <F3>
<S> <C> <C> <C>
Per Share . . . . . . $100 $.460 $99.540
Total . . . . . . . . $12,000,000 $55,200 $11,944,800
<FN>
<F1> Plus accrued dividends, if any, from date of original issue.
<F2> The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
<F3> Before deduction of expenses payable by the Company, estimated at
$96,000.
</TABLE>
The shares of New Preferred Stock are being offered by the Underwriter,
subject to prior sale, when, as and if accepted by it, and subject to certain
conditions. It is expected that certificates for the shares of New Preferred
Stock will be made available for delivery in book-entry form only through the
facilities of The Depository Trust Company in New York, New York on or about
March 16, 1994.
Smith Barney Shearson Inc.
March 9, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW
PREFERRED STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The proceeds to the Company from the sale of the New Preferred
Stock will be used to repay short-term borrowings incurred to redeem at a
premium all of the 120,000 outstanding shares of the Company's $8.75
Cumulative Preferred Stock, $100 par value. The aggregate redemption premium
of $1,050,000 will be paid from general Company funds.
S-2
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
------------------------------------
(Thousands of dollars, except ratios)
<C>
Year Ended
December 31,
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
INCOME STATEMENT DATA:
Operating Revenues $71,237 $78,115 $86,086 $89,167 $99,996
Income Before Preferred Stock
Dividends $ 7,124 $ 7,979 $11,361 $12,149 $14,833
Earnings Applicable to Common
Stock $ 6,074 $ 6,929 $10,311 $11,099 $13,783
Ratio of Earnings to Fixed
Charges and Preferred
Dividends <F1> 1.75 1.79 2.16 2.25 2.54
December 31,
---------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
NET UTILITY PLANT $275,588 $297,577 $319,421 $347,253 $373,293
<CAPTION>
December 31, 1993
--------------------------------------
Actual <F2>
-------
<S> <C> <C>
Outstanding %
----------- ---------
CAPITALIZATION:
Long-Term Debt, net of unamortized discount
and excluding current portion $141,910 50.7%
Preferred Stock 12,000 4.3%
Common Shareholder's Equity 125,765 45.0%
-------- ------
Total $279,675 100.0%
======== ======
Short-Term Debt, including current portion
of Long-Term Debt $42
===
- --------------------
<FN>
<F1> Earnings to Fixed Charges and Preferred Dividends represents the sum of Income Before Preferred Stock Dividends,
Federal income taxes and interest expenses (which is reduced by capitalized interest), divided by Fixed Charges and
Preferred Dividends. Fixed Charges and Preferred Dividends consist of interest on long and short-term debt (which is not
reduced by capitalized interest), dividends on Preferred Stock on a pre-tax basis and amortization of debt discount.
<F2> As the proceeds of this transaction will be used to repay short-term borrowings incurred to redeem all
of the $8.75 Cumulative Preferred Stock, $100 par value, and the aggregate redemption premium of $1,050,000
will be paid from general Company funds, the as adjusted capitalization will be the same as the actual capitalization at
December 31, 1993.
</TABLE>
S-3
<PAGE>
SUPPLEMENTAL DESCRIPTION OF THE NEW PREFERRED STOCK
The description of the New Preferred Stock herein supplements (and
to the extent inconsistent, supersedes) the description of the general terms
and provisions of the Preferred Stock contained in the accompanying
Prospectus under the heading "Description of Preferred Stock". The New
Preferred Stock will be issued pursuant to a certificate of amendment to the
Company's Certificate of Incorporation filed with the Secretary of State of
the State of New Jersey. The summary below does not purport to be complete
and is qualified in its entirety by reference to such certificate of
amendment and Certificate of Incorporation and the accompanying Prospectus.
Capitalized terms used herein and not otherwise defined are used with the
same meanings ascribed thereto in the accompanying Prospectus.
Dividends
The New Preferred Stock will provide for dividends at the annual
rate per share shown on the cover page of this Prospectus Supplement, when
and as declared by the Board of Directors out of funds legally available for
the payment of dividends and in preference to any dividends or distributions
on junior stock. Dividends shall be payable quarterly on March 1, June 1,
September 1 and December 1 in each year, commencing June 1, 1994, to the
persons in whose names the shares of the New Preferred Stock are registered
at the close of business on such day as may be set by the Board of Directors
not less than 10 nor more than 30 days preceding the applicable dividend
payment date. Dividends on the New Preferred Stock are cumulative from the
date of issuance.
Redemption Provisions
The New Preferred Stock is not redeemable at the option of the
Company at any time. The Company is required to redeem all 120,000 shares of
the New Preferred Stock on March 1, 2004 at a mandatory redemption price of
$100 per share, plus unpaid accrued dividends to such date. The Company may
credit shares of the New Preferred Stock purchased by it or on its behalf
against its obligation to make such mandatory redemption.
Issuance of Additional Preferred Stock
As of December 31, 1993 and after giving effect to the sale of the
New Preferred Stock, the Company would be permitted to issue a maximum of
754,026 additional shares of Senior Preferred Stock, $100 par value (at an
assumed dividend rate per annum of $7.00 per share and assuming further that
the proceeds from the sale of such additional shares are not used to retire
any outstanding indebtedness or stock ranking prior to, or on a parity with,
such additional shares as to dividends or assets), under the restrictions
contained in the Company's Certificate of Incorporation, as described under
the caption "Description of Preferred Stock -- Voting Rights" in the
accompanying Prospectus.
Registrar and Transfer Agent
The Registrar and Transfer Agent for the New Preferred Stock will
be the Company. See "Description of Preferred Stock -- Registrar and
Transfer Agent" in the accompanying Prospectus.
S-4
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions set forth in the
Purchase Agreement, Smith Barney Shearson Inc. (the "Underwriter") has agreed
to purchase, and the Company has agreed to sell to the Underwriter, all of
the shares of the New Preferred Stock.
Pursuant to the Purchase Agreement and subject to the terms and
conditions set forth therein, the Underwriter has agreed to purchase all of
the shares of the New Preferred Stock offered hereby if any shares of such
New Preferred Stock are purchased.
The Underwriter proposes to offer the New Preferred Stock to the
public initially at the public offering price set forth on the cover page of
this Prospectus Supplement and to certain dealers at such price less a
concession of $.20 per share. The Underwriter may allow and such dealers may
reallow a concession not in excess of $.15 per share of New Preferred Stock
on sales to certain other dealers. After the initial offering, the public
offering price and concession and discount to dealers may be changed.
The Company has agreed to indemnify the Underwriter against certain
civil liabilities, including certain liabilities under the Securities Act of
1933, as amended.
The Company has been advised by the Underwriter that it currently
intends to make a market in the New Preferred Stock, but that it is not
obligated to do so and may discontinue making a market at any time without
notice. The Company currently has no intention to list the New Preferred
Stock on any securities exchange, and there can be no assurance given as to
the liquidity of the trading market for the New Preferred Stock.
S-5
<PAGE>
P R O S P E C T U S
- -------------------
$27,000,000
ELIZABETHTOWN WATER COMPANY
Cumulative Preferred Stock
Elizabethtown Water Company (the "Company") intends to offer from
time to time, in one or more transactions, up to $27,000,000 aggregate par
value of its Cumulative Preferred Stock, $100 par value and/or Cumulative
Preferred Stock--$25 Par, $25 par value (collectively, the "Preferred Stock")
in one or more series at prices and on terms to be determined at the time or
times of sale. The series designation, number of shares in each series, rate
and time of payment of dividends, initial public offering price, if any,
redemption and sinking fund provisions, if any, and other specific terms of
each series of the Preferred Stock in respect of which this Prospectus is
being delivered will be set forth in an accompanying prospectus supplement
(the "Prospectus Supplement").
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.
The Company intends to sell the Preferred Stock to or through
underwriters, dealers, agents or directly to a limited number of purchasers.
The names of, and the principal amounts to be purchased by or through,
underwriters, dealers or agents, if any, the compensation of such persons and
other terms in connection with the offering and sale of such Preferred Stock
will be set forth in the Prospectus Supplement. See "Plan of Distribution".
The date of this Prospectus is February 4, 1994
<PAGE>
AVAILABLE INFORMATION
Elizabethtown Water Company ("Elizabethtown" or the "Company") is
subject to the informational requirements of the Securities Exchange Act of
1934 (the "Exchange Act") and, in accordance therewith, files reports and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information concerning the Company can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549; Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60604; and Seven World Trade Center, 13th Floor, New York,
New York 10048. Copies of such materials can also be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
(File No. 0-628) pursuant to the Exchange Act are incorporated herein by
reference:
(1) Annual Report of the Company on Form 10-K for the year ended
December 31, 1992.
(2) Quarterly Reports of the Company on Form 10-Q for the quarters
ended March 31, 1993,
June 30, 1993 and September 30, 1993.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Preferred
Stock shall be deemed to be incorporated herein by reference and shall be
deemed to be a part hereof from the date of filing of such documents. Such
documents and the documents enumerated above are hereinafter referred to as
"Incorporated Documents"; provided, however, that the documents enumerated
above or subsequently filed by the Company pursuant to Section 13, 14 or 15
of the Exchange Act in each year during which this offering is in effect
prior to the filing with the Commission of the Company's Annual Report on
Form 10-K covering such year shall not be Incorporated Documents or be
incorporated by reference in this Prospectus or be a part hereof from and
after such filing of such Annual Report on Form 10-K.
Any statement contained herein or in an Incorporated Document 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
Incorporated Document or in an accompanying Prospectus Supplement 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.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, on the written
or oral request of any such person, a copy of any document referred to above
which has been incorporated in this Prospectus by reference other than
exhibits to such document (unless such exhibits are specifically incorporated
by reference into such document). Requests for such copies should be
directed to: Andrew M. Chapman, Senior Vice President, Chief Financial
Officer and Treasurer, Elizabethtown Water Company, 600 South Avenue,
Westfield, New Jersey 07091-0788; Telephone number: (908) 654-1234. The
information relating to the Company contained in this Prospectus does not
purport to be comprehensive and should be read together with the information
contained in the Incorporated Documents.
No person has been authorized to give any information or to make
any representation not contained, or incorporated by reference, in this
Prospectus or, with respect to any series of the Preferred Stock, the
Prospectus Supplement relating thereto, and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company or any underwriter. This Prospectus and any
Prospectus Supplement do 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 in such jurisdiction.
Neither the delivery of this Prospectus and a Prospectus Supplement nor any
sale made thereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date of
that Prospectus Supplement.
2
<PAGE>
THE COMPANY
Elizabethtown Water Company (the "Company"), a New Jersey
corporation, is a regulated water utility, one of whose corporate
predecessors was first incorporated in 1854. The present corporation was
formed in 1961 as the result of a consolidation of Elizabethtown Water
Company Consolidated and Plainfield-Union Water Company. The Company owns
all of the common stock of The Mount Holly Water Company ("Mount Holly"),
which contributed approximately 3% of the Company's consolidated operating
revenues for 1992. The Company and its subsidiary, Mount Holly, are engaged
in the treatment and distribution of water for domestic, commercial,
industrial and fire protection purposes and for resale to municipal systems
and other investor-owned water companies. Throughout their central New
Jersey service areas, the Company and Mount Holly serve a population of
approximately 552,000 at retail and provide, on a wholesale basis, a portion
of the water requirements of eight municipal systems and three investor-owned
water utilities. At December 31, 1992, the Company was the fifth largest
investor-owned water utility in the United States, based on gallons of water
pumped annually.
The Company and Mount Holly are subject to regulation by the New
Jersey Board of Regulatory Commissioners with respect to rates and service,
the issuance and sale of securities, classification of accounts, mergers, and
other matters. The Company and Mount Holly periodically seek rate relief to
cover the cost of increased operating expenses, increases in financing
expenses due to additional investments in utility plant, and other costs of
doing business.
The Company is a wholly-owned subsidiary of E'town Corporation
("E'town"), a New Jersey corporation which acts primarily as a holding
company for the Company and a real estate subsidiary, E'town Properties, Inc.
The principal executive offices of the Company are located at 600 South
Avenue, Westfield, New Jersey 07091-0788. The telephone number is
(908) 654-1234.
USE OF PROCEEDS
As to be more fully set forth in the Prospectus Supplement, the net
proceeds from the sale of the Preferred Stock will be used by the Company for
general corporate purposes, including financing its ongoing construction
program, repayment of short-term bank debt and redemption of outstanding
preferred stock.
Reference is made to the Incorporated Documents with respect to the
Company's general capital requirements and general financing plans and
capabilities.
DESCRIPTION OF PREFERRED STOCK
General
The authorized capital stock of the Company consists of 10,000,000
shares of Common Stock without par value, 500,000 shares of Junior Preferred
Stock, $25 par value ("Junior Preferred Stock"), 200,000 shares of Cumulative
Preferred Stock, $100 par value ("Cumulative Preferred Stock"), and 500,000
shares of Cumulative Preferred Stock--$25 Par, $25 par value ("Cumulative
Preferred Stock--$25 Par"). As of December 31, 1993, no shares of Junior
Preferred Stock or Cumulative Preferred Stock--$25 Par were outstanding, and
120,000 shares of Cumulative Preferred Stock were outstanding in a single
series bearing dividends at the annual rate of $8.75 per share.
Cumulative Preferred Stock and Cumulative Preferred Stock--$25 Par
may be issued from time to time in series when authorized by the Company's
Board of Directors, up to the number of authorized but unissued shares of
Cumulative Preferred Stock and Cumulative Preferred Stock--$25 Par,
respectively, set forth in the Company's certificate of incorporation, as
amended from time to time (the "Certificate of Incorporation"). The
3
<PAGE>
series designation, dividend rate (or method of determining dividend rate),
redemption prices and other terms of each series are determined by the Board
of Directors to the extent not fixed by the Certificate of Incorporation.
The dividend rate, dividend payment dates, redemption, sinking fund, if any,
and the other terms and provisions of each series of Preferred Stock will be
set forth in the Prospectus Supplement.
Shares of the Cumulative Preferred Stock and the Cumulative
Preferred Stock--$25 Par rank on a parity in respect of dividends or payment
in case of liquidation and, to the extent not fixed and determined by the
Certificate of Incorporation, have the same rights, preferences and powers.
The differences in liquidation value and voting rights are currently the only
differences in rights between the two classes and are summarized below under
"Liquidation Rights" and "Voting Rights", respectively. The Cumulative
Preferred Stock and the Cumulative Preferred Stock--$25 Par are hereinafter
collectively referred to as the "Senior Preferred Stock".
The general provisions of the Senior Preferred Stock, applicable to
all series of Cumulative Preferred Stock and Cumulative Preferred Stock--$25
Par, and the specific provisions applicable to each series, including the
Preferred Stock, are set forth in the Certificate of Incorporation. Copies
of the applicable provisions of the Certificate of Incorporation and the
forms of the proposed certificates of amendment to the Certificate of
Incorporation establishing series of the Preferred Stock, are filed with the
Registration Statement of which this Prospectus is a part as exhibits.
Certain provisions of the Company's Senior Preferred Stock are summarized
below, and the section references are to the provisions of Article VII of the
Certificate of Incorporation. The summary does not purport to be complete
and is qualified in its entirety by express reference to the aforementioned
exhibits to the Registration Statement for a complete statement of the Senior
Preferred Stock provisions.
Dividend Rights
The holders of Senior Preferred Stock of each series are entitled
to receive cumulative cash dividends, in preference to the holders of Common
Stock and the holders of Junior Preferred Stock, when and as declared by the
Board of Directors out of funds legally available therefor at the rate
provided for such series. Dividends may not be declared on any series of
Senior Preferred Stock in respect of any quarterly dividend period unless
there shall be likewise declared on all shares of all series of Senior
Preferred Stock at the time outstanding, like proportionate dividends,
ratably in proportion to the respective annual dividend rates fixed therefor
in respect of all quarterly dividend periods terminating on the same or an
earlier date. No dividend may be declared or paid on the Common Stock or
Junior Preferred Stock or other stock of the Company subordinate to the
Senior Preferred Stock in respect of dividends or assets (which together with
Common Stock and Junior Preferred Stock is defined as "junior stock"), other
than dividends payable solely in junior stock, unless all cumulative
dividends on the outstanding Senior Preferred Stock have been paid or
declared and a sum sufficient therefor set aside. Accruals of dividends
shall not bear interest. (Section 2.B(a))
Dividends on each series of Preferred Stock will be payable
quarterly or otherwise at the rate provided for such series. Unless
otherwise set forth in the Prospectus Supplement, dividends on each series of
Preferred Stock shall be payable on March 1, June 1, September 1 and December
1 in each year for such series.
Sinking Fund Provisions
If a sinking fund is provided for a particular series of Preferred
Stock, the Prospectus Supplement will describe the terms of the sinking fund
for that series.
Redemption and Purchase
The Company, at the option of the Board of Directors, may at any
time redeem any outstanding shares of Senior Preferred Stock for other than
sinking fund purposes, either as a whole or in part, upon not less than 30
nor more than 60 days' prior notice, at the applicable redemption price
provided for such series. In case of a redemption of only part of the
outstanding shares of any series of Senior Preferred Stock, the redemption
may
4
<PAGE>
be either pro rata or by lot as determined by the Board of Directors.
(Section 2.B(c)) Notwithstanding the foregoing, for any particular series of
Preferred Stock the Board of Directors may provide that no shares of such
series shall be redeemable prior to a fixed date, which date shall be set
forth in the applicable Prospectus Supplement. See the Prospectus Supplement
with respect to any particular series of Preferred Stock for more information
concerning the redemption provisions for that series.
The Company may purchase any outstanding shares of Senior Preferred
Stock at a price not exceeding the then current redemption price of such
shares plus accrued dividends to the date of such purchase, except that no
such purchase may be made if the Company is in arrears with respect to
payment of dividends on any shares of Senior Preferred Stock outstanding or
if any event of default exists under the Senior Preferred Stock provisions
(Section 2.B(e)).
Liquidation Rights
The Senior Preferred Stock is entitled to receive upon voluntary
liquidation, dissolution or winding up of the affairs of the Company the then
current redemption price for the particular series or, in respect of any
period when no redemption price is so fixed, the par value per share thereof,
and, upon involuntary liquidation, dissolution or winding up of the affairs
of the Company $100 per share in the case of the Cumulative Preferred Stock
and $25 per share in the case of the Cumulative Preferred Stock--$25 Par,
plus in each case all dividends accumulated and unpaid to the date of such
payment, before any payment is made on junior stock.
Voting Rights
Except as otherwise provided by law or as described below, holders
of Senior Preferred Stock have no voting rights (Sections 2.B(b)).
Whenever the holders of the Senior Preferred Stock have the right
to vote or consent to an action as provided by law or by the Senior Preferred
Stock provisions, both classes of Senior Preferred Stock (except as described
below) vote together as a single class, with each outstanding share of
Cumulative Preferred Stock entitled to one vote and each share of Cumulative
Preferred Stock--$25 Par entitled to 1/4 vote (Sections 2.B(b)).
Whenever dividends on all outstanding shares of all series of the
Cumulative Preferred Stock or Cumulative Preferred Stock--$25 Par shall be in
default in an amount equivalent to four (4) full quarter-yearly dividends,
and until all dividends in default on the Cumulative Preferred Stock or
Cumulative Preferred Stock--$25 Par shall have been paid, the holders of all
shares of the Senior Preferred Stock, voting separately as one class, shall
be entitled to elect the smallest number of directors necessary to constitute
a majority of the full Board of Directors, and the holders of the Common
Stock and Junior Preferred Stock, voting separately as a class, shall be
entitled to elect the remaining directors. Such special voting rights of the
Senior Preferred Stock shall cease upon the termination of the condition
giving rise thereto (Sections 2.B(b)(1) and (2)).
Pursuant to the Certificate of Incorporation as it is to be amended
at the time of the issuance and sale of the Preferred Stock, without the
consent of the holders of a majority of the total number of shares of the
Senior Preferred Stock then outstanding, the Company may not:
1. Issue, sell or otherwise dispose of any additional shares of
Senior Preferred Stock or of any other class of stock ranking prior to,
or on a parity with, the Senior Preferred Stock as to dividends or
assets, unless the gross income available for interest of the Company
determined, after provision for depreciation and all taxes and in
accordance with generally accepted accounting principles, for a period
of twelve (12) consecutive calendar months within the fifteen (15)
calendar months immediately preceding the issuance, sale or disposition
of such stock, shall have been at least one and one-half times the sum
of (x) the annual interest charges on all indebtedness of the Company
having a maturity at date of issuance of more than one year and (y) the
annual dividend requirements on all outstanding shares of the Senior
Preferred Stock and all other classes of stock ranking prior to, or on a
parity with, the Senior Preferred
5
<PAGE>
Stock as to dividends or assets, including the shares proposed to be
issued; provided that there shall be excluded from the foregoing
computation interest charges on all indebtedness and dividends on all
shares of stock which are to be retired in connection with the issue of
such additional shares; and provided, further, that in any case where
such additional shares are to be issued in connection with the
acquisition of new property, the net earnings of the property to be so
acquired may be included on a pro forma basis in the foregoing
computation, computed on the same basis as the net earnings of the
Company (Section 2.B(b)(7)(i)); or
2. Issue, sell or otherwise dispose of any shares of Senior
Preferred Stock or of any other class of stock ranking prior to, or on a
parity with, the Senior Preferred Stock as to dividends or assets,
unless the Junior Stock Equity of the Company (as defined below) shall
be not less than the aggregate amount payable on the involuntary
dissolution, liquidation or winding-up of the Company, in respect of all
shares of the Senior Preferred Stock and all shares of stock, if any,
ranking prior thereto, or on a parity therewith, as to dividends or
assets, which will be outstanding after the issue of the shares proposed
to be issued. As used herein, "Junior Stock Equity of the Company"
shall mean the aggregate of the par value of, or stated capital
represented by, all stock (including the Junior Preferred Stock and the
Common Stock) ranking junior to the Senior Preferred Stock as to
dividends and assets, all earned surplus, capital or paid-in surplus,
and any premiums on any such junior stock (Section 2.B(b)(7)(ii)).
Without the consent of the holders of at least two-thirds of the
total number of shares of the Senior Preferred Stock then outstanding, or at
least two-thirds of the outstanding shares of the class of Senior Preferred
Stock affected if only one such class is affected, the Company may not:
1. Create or authorize any new stock ranking prior to the Senior
Preferred Stock as to dividends or assets, or create or authorize any
security convertible into shares of any such stock (Section
2.B(b)(6)(i)); or
2. Amend, alter or repeal any of the rights, preferences or
powers of the Senior Preferred Stock so as to affect adversely such
rights, preferences or powers (Section 2.B(b)(6)(ii)).
Registrar and Transfer Agent
The Registrar and Transfer Agent for each series of the Preferred
Stock will be as set forth in the applicable Prospectus Supplement.
Liability for Further Calls or Assessments
The Preferred Stock, when duly issued, will be fully paid and non-
assessable.
Preemptive or Other Subscription Rights
The Preferred Stock is not entitled to any preemptive or other
subscription rights.
Conversion Rights
Upon issuance of a series of Preferred Stock, the Board of
Directors may fix the rights of holders of shares convertible into stock of
another class. No conversion rights have been granted respecting any
outstanding Preferred Stock nor will the Preferred Stock have any such
conversion rights.
Book-entry Only System
Unless otherwise indicated in the applicable Prospectus Supplement,
each new series of Preferred Stock will be issued initially under a book-
entry only system and will be issued in the form of one or more fully
6
<PAGE>
registered stock certificates that will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York ("DTC"), or such other
depository as may be subsequently designated, and registered in the name of
Cede & Co., as nominee for DTC.
So long as DTC, or its nominee, is the owner of any Preferred
Stock, DTC or such nominee, as the case may be, will be considered the sole
registered holder of such Preferred Stock for all purposes under the
Certificate of Incorporation. Payments of redemption price and dividends on
such Preferred Stock will be made to DTC, or its nominee, as the case may be,
as the holder of such Preferred Stock. Except as set forth below, owners of
beneficial interests in such Preferred Stock will not be entitled to have any
of the individual Preferred Stock registered in their names, will not receive
or be entitled to receive physical delivery of any such Preferred Stock and
will not be considered the holders thereof under the Certificate of
Incorporation.
If DTC is at any time unwilling or unable to continue as depository
and a successor depository is not appointed, the Company will issue
certificates for Preferred Stock in exchange for the Preferred Stock held by
DTC. In addition, the Company may at any time and in its sole discretion
determine not to have all or any particular series of the Preferred Stock
held by DTC and, in such event, will issue Preferred Stock certificates in
exchange for such Preferred Stock held by DTC. In any such instance, an
owner of a beneficial interest in Preferred Stock will be entitled to
physical delivery of Preferred Stock certificates equal in par value to its
beneficial interest and to have such Preferred Stock registered in its name.
Upon the issuance of the Preferred Stock, DTC will credit, on its
book-entry registration and transfer system, the respective par values of
beneficial interests to the accounts of institutions that have accounts with
DTC ("Participants"). The accounts to be credited will initially be
designated by any Underwriter or the Company. Ownership of beneficial
interests in the Preferred Stock will be limited to Participants or persons
that may hold interests through Participants. Ownership of beneficial
interests in the Preferred Stock will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC (with
respect to the Participants' interests) or by Participants or persons that
hold through Participants (with respect to persons other than Participants).
The laws of some states require that certain purchasers of securities take
physical delivery of such securities. Such limits and such laws may impair
the ability to transfer beneficial interests in the Preferred Stock.
Upon receipt of any payment of the redemption price or dividends in
respect of Preferred Stock, DTC's current practice is to credit immediately
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the par value of such Preferred Stock as
shown on the records of DTC. Payments by Participants to owners of
beneficial interests in the Preferred Stock will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name,"
and will be the responsibility of such Participants, subject to any statutory
or regulatory requirements that may be in effect from time to time.
Conveyance of notices and other communications by DTC to Participants and by
Participants to other beneficial owners will be governed by arrangements
among them, subject to any statutory and regulatory requirements as may be in
effect from time to time.
Each purchaser of Preferred Stock must rely on (1) the procedures
of DTC, and, if such purchaser is not a Participant, the procedures of the
Participant through which such purchaser holds its beneficial interest, to
receive payments and notices, and (2) the records of DTC and, if such
purchaser is not a Participant, the records of the participant through which
such purchaser holds its beneficial interest, to evidence its beneficial
ownership of Preferred Stock.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities of its Participants
and facilitates the clearance and settlement of securities transactions among
its Participants in such securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical
movement of securities certificates. DTC's Participants include securities
brokers and dealers (including any Underwriter of Preferred Stock), banks,
trust companies, clearing corporations, and certain other organizations,
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some of whom (and/or their representatives) own DTC. Access to DTC's book-
entry system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly. The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources (including DTC) that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
NEITHER THE COMPANY, ANY UNDERWRITER NOR ANY AGENT FOR PAYMENT ON
OR REGISTRATION OF TRANSFER OR EXCHANGE OF PREFERRED STOCK WILL HAVE ANY
RESPONSIBILITY OR LIABILITY FOR ANY OF THE RECORDS RELATING TO OR PAYMENTS
MADE ON ACCOUNT OF BENEFICIAL INTERESTS IN ANY PREFERRED STOCK OR FOR
MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO SUCH BENEFICIAL
INTERESTS.
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDENDS
Twelve Months
Year Ended December 31, Ended September 30,
------------------------------------- -----------------------------
1988 1989 1990 1991 1992 1992 1993
---- ---- ---- ---- ---- ---- ----
2.11 1.75 1.79 2.16 2.25 2.15 2.54
Earnings to Fixed Charges and Preferred Dividends represents the
sum of Income Before Preferred Stock Dividends, Federal income taxes and
interest expenses (which is reduced by capitalized interest), divided by
Fixed Charges and Preferred Dividends. Fixed Charges and Preferred Dividends
consist of interest on long and short-term debt (which is not reduced by
capitalized interest), dividends on Preferred Stock on a pre-tax basis and
amortization of debt discount. The ratios for the nine months ended
September 30, 1992 and 1993 were 2.28 and 2.67, respectively.
PLAN OF DISTRIBUTION
The Company may sell the Preferred Stock in one or more sales in
any of three ways: (i) through one or more underwriters or dealers; (ii)
directly to a limited number of purchasers or to a single purchaser; or (iii)
through one or more agents. The Prospectus Supplement relating to the
Preferred Stock will set forth the terms of the offering of the Preferred
Stock, including the name or names of any underwriters, dealers or agents,
the purchase price of such Preferred Stock and the proceeds to the Company
from such sale, any items constituting underwriters' compensation, any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If underwriters are used in the sale, the Preferred Stock will be
acquired by the underwriters as principals and may be resold from time to
time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
the sale. The underwriter or underwriters with respect to a particular
underwritten offering of Preferred Stock will be named in the Prospectus
Supplement relating to such offering. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Preferred Stock will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all such Preferred Stock if any is
purchased; provided that the agreement between the
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Company and the underwriter or underwriters providing for the sale of the
Preferred Stock may provide that under certain circumstances involving a
default of underwriters, less than all of the Preferred Stock may be
purchased.
Preferred Stock may be sold directly by the Company or through
agents designated by the Company from time to time. The Prospectus
Supplement will set forth the name of any agent involved in the offer or sale
of the Preferred Stock in respect of which the Prospectus Supplement is
delivered as well as any commissions payable by the Company to such agent.
Unless otherwise indicated in the Prospectus Supplement, any such agent will
be acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase Preferred Stock from the Company at the
public offering price set forth in the Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date in the future. Such contracts will be subject to those conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement will set
forth the commission payable for solicitation of such contracts.
Each Prospectus Supplement relating to a particular offering of
Preferred Stock will contain a statement by the Company (i) as to whether or
not the Company is able to predict the existence of a secondary market for
such securities and, if such existence is predicted, as to the extent of such
secondary market, and (ii) if such securities are to be purchased by an
underwriter or underwriters, as to whether or not such underwriter or
underwriters intend to make a market in such securities.
Subject to certain conditions, the Company may agree to indemnify
any underwriters, dealers, agents or purchasers and their controlling persons
against certain civil liabilities, including certain liabilities under the
Securities Act of 1933.
LEGAL MATTERS
Certain legal matters concerning the offering of Preferred Stock
will be passed upon for the Company by Walter M. Braswell, Vice President,
Secretary and General Counsel of the Company and Winthrop, Stimson, Putnam &
Roberts, New York, New York, Special Counsel for the Company. Certain legal
matters will be passed upon for any underwriters, dealers or agents by
McCarter & English, Newark, New Jersey. At November 30, 1993, Mr. Braswell
beneficially owned, or had the right to acquire through options, 6,997 shares
of E'town's common stock.
EXPERTS
The consolidated financial statements and the related supplemental
schedules incorporated in this Prospectus by reference from the Company's
most recent Annual Report on Form 10-K have been audited by Deloitte &
Touche, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance
upon such report given upon the authority of that firm as experts in
accounting and auditing.
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