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As filed with the Securities and Exchange Commission on July 29, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
HOUSTON LIGHTING & POWER COMPANY
(Exact name of registrant as specified in its charter)
TEXAS 74-0694415
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(713) 207-1111
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------
HUGH RICE KELLY
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
1111 LOUISIANA
HOUSTON, TEXAS 77002
(713) 207-1111
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
------
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
------
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
------------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
===========================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (2) OFFERING PRICE (2) FEE (3)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, without par value (1) 5,000,000 shares $20.84 $104,200,000 $31,575.76
===========================================================================================================
</TABLE>
(1) Includes preference stock purchase rights of one Right per share associated
with the Common Stock.
(2) Estimated in accordance with Rule 457(c) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the registration fee
based upon the average of the high and low prices of Houston Industries
Incorporated common stock reported on the New York Stock Exchange Composite
Tape on July 22, 1997.
(3) As no separate consideration is payable for the Rights, the registration
fee for such securities is included in the fee for the Common Stock.
----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
EXPLANATORY NOTE
Houston Lighting & Power Company ("HL&P") is a party to an Agreement and
Plan of Merger dated as of August 11, 1996, as amended ("Merger Agreement"),
together with Houston Industries Incorporated ("HI"), a Texas corporation and
the parent company of HL&P, NorAm Energy Corp., a Delaware corporation,
("NorAm"), and HI Merger, Inc. ("HI Merger"), a Delaware corporation and a
direct wholly-owned subsidiary of HI, pursuant to which HI will merge into HL&P
(the "HI/HL&P Merger"), and NorAm will merge into HI Merger (collectively, the
"Merger"). HL&P, the surviving corporation of the HI/HL&P merger, will be
renamed "Houston Industries Incorporated" as part of the Merger. HI currently
has an effective Registration Statement on Form S-3 covering shares of its
common stock in connection with its Investor's Choice Plan. HL&P will continue
the Investor's Choice Plan following consummation of the Merger and since HL&P
is not a "successor issuer" of HI (as such term is defined under the rules and
regulations promulgated under the Securities Act of 1933), HL&P is filing this
Registration Statement on Form S-3 to register shares of its common stock to be
issued pursuant to the Amended and Restated Investor's Choice Plan. The
Prospectus included in this Registration Statement on Form S-3 is drafted as if
the Merger has been consummated and will be used only following the consummation
of the Merger.
<PAGE>
<TABLE>
<S> <C>
*************************************************************************************
* Information contained herein is subject to completion or amendment. A *
* registration statement relating to these securities has been filed with the *
* Securities and Exchange Commission. These securities may not be sold nor may *
* offers to buy be accepted prior to the time the registration statement becomes *
* effective. This Prospectus shall not constitute an offer to sell or the *
* solicitation of an offer to buy nor shall there be any sale of these securities *
* in any state in which such offer, solicitation or sale would be unlawful prior *
* to registration or qualification under the securities laws of any such state. *
*************************************************************************************
</TABLE>
SUBJECT TO COMPLETION, DATED JULY 29, 1997
PROSPECTUS
HOUSTON INDUSTRIES INCORPORATED
5,000,000 SHARES
COMMON STOCK
INVESTOR'S CHOICE PLAN
Houston Industries Incorporated (the "Company" or "Houston
Industries") hereby offers its shareholders and other interested investors an
opportunity to purchase shares of the Company's common stock, without par value
("Common Stock"), directly from the Company through participation in its
Investor's Choice Plan ("Investor's Choice" or the "Plan"). Investor's Choice
offers a number of convenient options for investing in shares of Common Stock,
including through reinvestment of 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").
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 on the open market. Any open market purchases will
be made through an Independent Agent (as defined below) selected by the Company.
The Common Stock is listed on the New York, the Chicago and the London Stock
Exchanges. The closing price of the Common Stock on July 28, 1997 on the New
York Stock Exchange was $21.00.
The purchase price of newly issued or treasury shares of Common Stock
purchased under the Plan for a particular Investment Date (as defined below)
will be the average of the high and low sales prices for 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
aggregate weighted average price per share (adjusted for brokerage fees and
commissions, any service charges and applicable taxes) of the aggregate number
of shares purchased or sold during the relevant period. There will be no
discount from the purchase price for shares purchased under the Plan. The
Company will pay the costs of administration of the Plan, except that
participants in the Plan ("Participants") will bear the cost of brokerage fees
and commissions, any services charges and applicable taxes related to shares
purchased or sold on 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 who are not presently record holders of Common Stock are offered only
through a registered broker/dealer in those jurisdictions.
This Prospectus contains a summary of the material provisions of the
Plan, and should be retained for future reference.
--------------------
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 date of this Prospectus is , 1997.
<PAGE>
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 of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite
1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can also be obtained at prescribed rates by
writing the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. The Common Stock is listed on the New York, Chicago and
London Stock Exchanges. Reports, proxy statements and other information
concerning the Company can be inspected and copied at the offices of the New
York Stock Exchange at 20 Broad Street, New York, New York 10005 and at the
offices of The Chicago Stock Exchange, 440 South LaSalle Street, Chicago,
Illinois 60605.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Common Stock offered hereby. This Prospectus does
not contain all the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information with respect to the Company and the
shares of Common Stock offered hereby, reference is made to the Registration
Statement and the exhibits and the financial statements, notes and schedules
filed as a part thereof or incorporated by reference therein, which may be
inspected at the public reference facilities of the Commission at the addresses
set forth above or through the Commission's home page on the Internet.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as an
exhibit to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (under its former name,
Houston Lighting & Power Company) (File No. 1-3187) and by Houston Industries
Incorporated, a Texas corporation and former parent company of the Company ("Old
HI") (File No. 1-7629) with the Commission are incorporated into this Prospectus
by reference:
(1) the Company's and Old HI's Combined Annual Report on Form 10-K for
their respective fiscal years ended December 31, 1996;
(2) the Company's and Old HI's Combined Quarterly Report on Form 10-Q for
their respective quarterly periods ended March 31, 1997;
(3) the Company's Current Report on Form 8-K dated February 4, 1997;
(4) the Company's and Old HI's Combined Current Report on Form 8-K dated
February 5, 1997; and
(5) the descriptions of each of the Common Stock and the Company's Rights
to Purchase Preference Stock, which are contained in the Company's
Registration Statement on Form 8-B.
Each document or report filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of shares of Common Stock made by this Prospectus
shall be deemed to be incorporated by reference into this Prospectus and to be a
part of this Prospectus from the date of filing of such document. Any statement
contained herein, or in any document all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of the Registration Statement and 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
2
<PAGE>
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents or for additional information regarding
the Plan and its Administrator should be directed to the Investor Services
Department, Houston Industries Incorporated, 1111 Louisiana, Houston, Texas
77002, telephone number (713) 207-1111.
THE COMPANY
The Company operates principally in the electric utility business, under
the name "Houston Lighting & Power Company", and in the natural gas distribution
and transmission business, through its NorAm Energy Corp. subsidiary. Based on
an exemption order obtained from the Commission, the Company is currently exempt
from regulation as a "registered" holding company under the Public Utility
Holding Company Act of 1935, as amended (the "1935 Act"), except with respect to
the acquisition of voting securities of other domestic public utility companies
and utility holding companies.
3
<PAGE>
THE NORAM MERGER
On August __, 1997, (i) Old HI merged into the Company and the Company
changed its name to "Houston Industries Incorporated" and (ii) NorAm Energy
Corp., a Delaware corporation, merged into a subsidiary of Old HI, the name of
which was changed to "NorAm Energy Corp." As a result of these mergers, NorAm
became a wholly owned subsidiary of the Company. As consideration for the
acquisition of NorAm, the Company issued _______ shares of Common Stock and paid
$______ billion in cash. At the time of the merger, NorAm and its subsidiaries
had approximately $_____ billion of outstanding indebtedness.
The Company's executive offices are located at Houston Industries Plaza,
1111 Louisiana, Houston, Texas 77002 (telephone number 713-207-1111).
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 by Participants 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.
4
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
INVESTOR'S CHOICE PLAN
PURPOSE
The purpose of Investor's Choice is to provide existing and potential
investors in the Company a convenient way to purchase shares of Common Stock and
to reinvest into Common Stock all or a portion of cash dividends and interest
payments on Eligible Securities.
KEY FEATURES OF INVESTOR'S CHOICE
. Participation by First-Time Investors in the Company: First-time
investors in the Company may become Participants by making a minimum
initial cash investment of $250 to purchase Common Stock through the Plan.
. Participation by Holders of Eligible Securities: Current holders of
Eligible Securities may become Participants by (i) electing to have all or
a portion of the cash dividend and interest payments on their Eligible
Securities reinvested in Common Stock, (ii) depositing certificates
representing Common Stock into the Plan for safekeeping or (iii) making a
minimum cash investment of $50 to purchase Common Stock through the Plan.
. Additional Cash Investments: Participants may purchase Common Stock at
any time, occasionally or at regular intervals, through the Plan by making
cash investments of at least $50 for any single investment up to an
aggregate of cash investments of $120,000 per calendar year.
. Investment Through Automatic Deductions: Cash investments may be made
through automatic deductions from predesignated bank or savings accounts on
a regular monthly or quarterly basis.
. Reinvestment: Participants may reinvest all or a portion of the cash
dividend and interest payments on their Eligible Securities.
. Purchases in Whole Dollar Amounts: Participants can buy shares in whole
dollar amounts, and their accounts are credited with appropriate whole and
fractional shares.
. Sales: Participants may sell shares of Common Stock held in the Plan
directly through the Plan.
. Frequent Purchases and Sales: Purchase and sale orders will be processed
at least once every five business days, and as often as every business day,
when practicable.
. Investment Retirement Accounts: Participants may maintain an Individual
Retirement Account ("IRA") through the Plan.
. Automatic Deposit of Dividends: Participants may receive Common Stock
cash dividends not reinvested through the Plan either by check or through
automatic deposit to their bank account.
. Safekeeping Service: Participants may deposit their Common Stock
certificates into their Plan account and receive regular statements showing
cumulative account activity.
. Transfers of Common Stock: Participants may transfer shares of Common
Stock credited to their Plan account to the account of another Participant
or transfer shares to any designated Person or entity, without charge.
Holiday and all occasion gift cards will be provided without charge to
accompany gifts.
. Account Statements: Quarterly statements will be mailed to each
Participant showing all transactions completed during the year to date,
total number of shares of Common Stock credited to his account and other
relevant account information.
5
<PAGE>
. Stock Certificates: A Participant may receive a stock certificate
representing all or a portion of the shares of Common Stock in his account
at any time upon request.
PLAN SUMMARY
The following is a summary of the Investor's Choice Plan and is not a
complete description of all terms and provisions of the Plan. The summary is
qualified in its entirety by reference to all of the terms and provisions of the
Plan. For more details, see a copy of the Plan, which is filed as 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"). As of the date of this Prospectus, the
Company is the Administrator. The Administrator administers the Plan, receives
cash from Participants, holds Participants' shares of Common Stock acquired
under the Plan, keeps records, sends statements of account activity to
Participants and performs other duties related to the Plan. The Administrator
will forward funds that are to be used to purchase shares, and orders to sell
shares, 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
under the Exchange Act. The Company reserves the right to continue serving as
the Administrator or appoint another qualified person or entity to serve in that
capacity.
Additionally, as discussed below under "Individual Retirement Accounts,"
First Trust Corporation has been appointed by the Company to act as the Trustee
for Investor's Choice Individual Retirement Accounts (the "IRA Trustee"). The
IRA Trustee maintains all investment records, provides quarterly reports to each
IRA Participant (as defined below) and makes all Internal Revenue Service
reports to each IRA Participant.
Participants may contact the Administrator or the IRA Trustee by writing,
telephoning or sending facsimiles to:
THE ADMINISTRATOR:
Houston Industries Incorporated
Investor Services Department
P. O. Box 4505
Houston, TX 77210
Telephone toll-free (business days from 8:00 a.m. to 5:00 p.m.,
Central Time):
(800) 231-6406 nationally
(713) 207-3060 in Houston
Facsimile: (713) 207-3129
THE IRA TRUSTEE:
First Trust Corporation
P. O. Box 173301
Denver, CO 80217-3301
Telephone toll-free (business days from 8:00 a.m. to 5:00 p.m.,
Mountain Time):
(800) 863-2608
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) the person or
entity fulfills the requirements of participation described below under
"Enrollment Procedures" and (ii) in the case of citizens or residents of a
country other than the United States, its
6
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territories and possessions, participation would not violate local laws
applicable to the Company, the Plan and the Participant.
ENROLLMENT PROCEDURES
After being furnished with a copy of this Prospectus, eligible applicants
may join Investor's Choice by returning a completed and signed Enrollment Form
to the Administrator and (i) making an initial cash investment in the Plan to
purchase Common Stock of at least $250 (for applicants who are not registered
holders of Eligible Securities) or $50 (for applicants who are registered
holders of Eligible Securities), (ii) electing to have all or a part of cash
dividends or interest payments on Eligible Securities reinvested into Common
Stock or (iii) depositing certificates representing shares of Common Stock into
the Plan for safekeeping. Applicants may obtain Enrollment Forms from the
Administrator upon written, facsimile or telephone request. Current registered
holders of Eligible Securities should sign their name(s) on the Enrollment Form
exactly as they appear on the certificates or instruments representing their
Eligible Securities.
A beneficial owner of Eligible Securities registered in street name (i.e.,
the name of a bank, broker or trustee) may participate in Investor's Choice by
(i) directing the financial intermediary to transfer Eligible Securities into
the Participant's name and (ii) depositing transferred shares of Common Stock
into the Plan for safekeeping and/or electing to reinvest cash dividends or
interest payments on transferred Eligible Securities in Common Stock through the
Plan. Alternatively, the beneficial owner may make arrangements with the
financial intermediary who is the registered holder to participate in Investor's
Choice on behalf of the beneficial owner.
An eligible applicant will become a Participant as soon as practicable
after the Administrator has received and accepted a properly completed
Enrollment Form.
ELIGIBLE SECURITIES
The following equity and debt securities of the Company are Eligible
Securities for participation in Investor's Choice:
. Common Stock
. Debentures, 9 3/8% Series due June 1, 2001
. Debentures, 7 7/8% Series due July 1, 2002
. $4 Preferred Stock
. First Mortgage Bonds, 6 3/4% Series due 1997
. First Mortgage Bonds, 9.15% Series due 2021
. First Mortgage Bonds, 8 3/4% Series due 2022
. First Mortgage Bonds, 7 3/4% Series due 2023
. First Mortgage Bonds, 7 1/2% Series due 2023
In addition, the Company from time to time may designate other equity or
debt securities of the Company and its subsidiaries as Eligible Securities.
INITIAL CASH INVESTMENTS AND ADDITIONAL CASH INVESTMENTS
Interested investors, whether or not registered holders of Eligible
Securities, may become Participants by making an investment through the Plan as
described herein. To become a Participant through a cash investment, an
applicant who is not a registered holder of Eligible Securities must include a
minimum initial cash investment of at least $250 with his completed Enrollment
Form, while an applicant who is a registered holder of Eligible Securities must
include a minimum initial cash investment of at least $50 with his completed
Enrollment Form. Additional cash investments, which Participants may make at
their discretion, must be at least $50 for any single investment; however, cash
investments in the aggregate (including both initial and additional cash
investments) may not exceed $120,000 per account per calendar year. Cash
investments may be paid by check or through automatic investing as described
below under "Cash Investment Procedures."
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The Administrator will invest cash investments in Common Stock beginning on
the next Investment Date that is at least one business day after the
Administrator receives the funds and instructions. Cash investment funds,
pending investment, will be credited to a Participant's account and held in a
trust account which is separated from other funds of the Company. Cash
investments not invested for a Participant within 30 days of receipt will be
promptly returned to the Participant. NO INTEREST WILL BE PAID ON AMOUNTS HELD
BY THE ADMINISTRATOR PENDING INVESTMENT.
A registered holder of Eligible Securities may invest cash payable to him
as a result of the redemption, tender or maturity, including accrued interest
and premium, if any, of Eligible Securities in Common Stock by delivering to the
Administrator an executed Enrollment Form designating such funds for investment.
Such funds will be treated as additional cash investments for purposes of
determining whether the maximum annual limit of $120,000 per year has been
reached.
The Administrator will return to a Participant any cash investment that has
not already been invested if it receives the Participant's request to stop
investment at least two business days prior to the applicable Investment Date.
However, no refund of a check or money order will be made until funds have been
collected by the Administrator. Accordingly, such refunds may take up to three
weeks or more to be remitted.
CASH INVESTMENT PROCEDURES
Cash Investments may be made by check or automatic deduction from
predesignated bank accounts, as described below. Participants should NEVER SEND
CASH for an investment.
Check Investment. Cash investments may be made by personal check or money
order payable in U.S. dollars to Houston Industries Incorporated Investor's
Choice Plan and mailed to the Administrator. Initial cash investments should be
accompanied by Enrollment Forms while additional cash investments should be
accompanied by the stub attached to each statement of account or transaction
advice sent to Participants.
Automatic Investing. Investor's Choice Participants may make automatic
monthly or quarterly investments of a specified amount (not less than $50 per
purchase nor more than $120,000 per calendar year) by electronic automatic
transfer of funds from a predesignated bank account.
To initiate automatic deductions, a Participant must execute an automatic
investing form (available from the Administrator) and return it to the
Administrator, along with a voided check or deposit slip on the bank account
from which funds are to be drawn. If investment every month is chosen,
automatic investing will begin on or about the 10th of each month approximately
30 days after receipt of the authorization form. If quarterly investment is
chosen, investments will begin on or about the 10th of each March, June,
September and December. In either case, automatic investing deductions will be
made two business days before the Investment Date. A PARTICIPANT WILL BE
CHARGED A RETURNED CHECK FEE BY HIS BANK IF THE DESIGNATED BANK OR SAVINGS
ACCOUNT DOES NOT HAVE SUFFICIENT FUNDS TO COVER THE AUTHORIZED DEDUCTION.
Participants may change the amount of their automatic investment by
notifying the Administrator in writing or by facsimile of the new amount, and
the change will take place approximately two weeks after the notice is received.
Similarly, a Participant may cancel automatic investing by instructing the
Administrator in writing or by facsimile, and the cancellation will be effective
approximately two weeks after the notice is received. To change a designated
bank account, a Participant must notify the Administrator in writing at least 30
days before the change is to take effect and supply a voided check or deposit
slip for the new account.
All cash investments are subject to collection by the Administrator for
full face value in U.S. funds. The method of delivery of any cash investment is
at the election and risk of the investor and will be deemed received when
actually received by the Administrator. If the delivery is by mail, it is
recommended that the investor use properly insured, registered mail with return
receipt requested, and that the mailing be made sufficiently in advance of the
appropriate Investment Date.
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INVESTMENT DATES
The Plan's "Investment Dates" occur at least once every five business days;
however, purchases will be made every business day when deemed practicable by
the Administrator. A Participant's cash investment will generally be invested
within five business days of receipt. For exceptions under certain
circumstances involving open market purchases, see "Source and Price of Shares"
below.
DIVIDEND AND INTEREST PAYMENT OPTIONS
Investor's Choice offers Participants the option of reinvesting cash
dividends and interest payments paid on their Eligible Securities in Common
Stock. With respect to cash dividends on Common Stock for which reinvestment is
not elected, Investor's Choice offers the option of direct deposit or check
payment, as described below.
Reinvestment of Cash Dividends and Interest Payments. Participants may
elect to reinvest all or part of the cash dividends and interest payments on
Eligible Securities registered in their names by making such election on their
initial Enrollment Form or by delivering written or facsimile instructions to
the Administrator. Participants electing partial reinvestment of cash dividends
and interest payments must designate the specific security or securities for
which partial reinvestment is desired and the number of whole shares or the
whole dollar amount they want to be reinvested. The amount reinvested will be
reduced by any amount which is required to be withheld under any applicable tax
or other statutes. Cash dividends and interest payments not being reinvested
will be sent to the Participant by direct deposit or check, as appropriate.
A Participant may change his reinvestment level and the Eligible Securities
on which cash dividend or interest payments are reinvested from time to time by
delivering a new Enrollment Form or written or facsimile instructions to the
Administrator. To be effective for a particular payment, the Administrator must
receive instructions of such change on or before the record date of the dividend
or interest payment. Record dates are usually the 15th of the month preceding a
payment date. The record date for Common Stock dividends is usually the 15th
of each February, May, August and November.
Dividends and interest payments will be invested beginning either on the
date of payment, if the payment date is an Investment Date, or on the first
Investment Date following payment. Dividend and interest payments not invested
within 30 days of receipt will be returned promptly to the Participant. Funds
pending investment 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. NO INTEREST WILL BE PAID ON FUNDS HELD BY THE ADMINISTRATOR PENDING
INVESTMENT.
Direct Deposit of Dividends on Common Stock. Through the Plan's direct
deposit feature, a Participant may elect to have any cash dividends on Common
Stock automatically deposited into a designated bank or savings account. Such
cash dividends will be deposited on the dividend payment date. Participants who
wish to have dividends automatically deposited must execute a direct deposit
authorization form (available from the Administrator) and send it to the
Administrator, along with a voided check or deposit slip for the designated bank
account.
Direct deposit authorization must be received by the Administrator at least
30 days before an applicable Common Stock dividend payment date to be effective
for that payment date. Participants can cancel direct deposit of dividends by
notifying the Administrator in writing or by facsimile. In order to be
effective for an applicable dividend payment date, the Administrator must
receive the cancellation notice at least 30 days before that dividend payment
date. To change a designated bank account for direct deposit of dividends, the
Administrator must receive written notice, accompanied by a voided check or
deposit slip for the new bank account, at least 30 days before an applicable
dividend payment date.
Check Payments of Dividends and Interest Payments. Cash dividends and
interest payments on Eligible Securities not designated for reinvestment or
direct deposit will be paid by check to the Participant. A check for the amount
of funds payable will be sent through the mail so that it will reach the
Participant as close as possible to the dividend or interest payment date.
9
<PAGE>
SOURCE AND PRICE OF SHARES
To fulfill Plan requirements, shares of Common Stock will be, at the
Company's discretion, purchased either directly from the Company (in which case
shares will be either authorized but unissued shares or shares held in the
treasury of the Company) or on the open market by an Independent Agent. The
purchases of Common Stock are subject to such terms and conditions, including
price and delivery, as the Administrator may accept.
Purchases from the Company. The price of Common Stock purchased from the
Company, either authorized but unissued shares or shares held in the treasury of
the Company, will be the average of the high and low sales price of the Common
Stock reported on the New York Stock Exchange Composite Tape as published in The
Wall Street Journal for the trading day immediately preceding the relevant
Investment Date, and the purchase will be made on 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 market quotations it deems
appropriate. No brokerage fee will be charged on shares acquired directly from
the Company.
Open Market Purchases and Sales. The price of Common Stock purchased or
sold on the open market will be the weighted average price (increased for
brokerage fees and commissions, any related service charges and applicable
taxes) of all shares purchased or sold, as the case may be, through the Plan for
the Investment Date. As of the date of this Prospectus, brokerage fees and
commission and related service charges are not expected to exceed ten cents per
share.
Purchases and sales of Common Stock on the open market will be made by an
Independent Agent beginning on the relevant Investment Date and will be
completed not later than five days from such date, except where completion at a
later date is necessary or advisable under any applicable laws or regulations.
Funds not invested within 30 days of receipt will be returned promptly to
Participants. Purchases and sales may be made on any securities exchange where
shares of Common Stock are traded, in the over-the-counter market, or by
negotiated transactions and may be subject to such terms and conditions
regarding price, delivery and other terms as agreed to by the Administrator.
The Independent Agent will have sole authority 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, and the selection of the broker or dealer (other than the
Independent Agent) through or from whom purchases or sales are to be made.
The Independent Agent may commingle each Participant's funds with those of
other Participants for the purchases and sales of Common Stock but will hold
such funds at all times in a separate trust account apart from the funds of the
Company.
The number of shares (including any fraction of a share rounded to three
decimal places) of Common Stock credited to a Participant's account for a
particular Investment Date will be determined by dividing the total amount of
cash dividends, interest payments and/or cash investments to be invested for the
Participant on the Investment Date by the relevant purchase price per share.
Dividend and voting rights will commence upon settlement, whether shares are
purchased from the Company or on the open market.
SAFEKEEPING SERVICE
Participants may use the Plan's free safekeeping service at any time.
Participants may deposit Common Stock into the Plan by delivering the stock
certificates without endorsement to the Administrator. Shares deposited in the
Plan for safekeeping will be transferred into the name of the Administrator or
its nominee and credited to the Participant's account under the Plan.
Thereafter, such shares will be treated in the same manner as shares purchased
through the Plan. By using the Plan's safekeeping service, Participants no
longer bear the risk of loss, theft or destruction of the certificates. Also,
because shares deposited for safekeeping are treated in the same manner as
shares purchased through the Plan, they may be efficiently and economically
transferred or sold if the Participant desires.
SALE OF COMMON STOCK
Participants may request the Administrator to sell any number of whole
shares held in their accounts at any time by written, telephone or facsimile
instructions. As soon as practicable after receipt of the request, but within
five
10
<PAGE>
business days, the Administrator will instruct the Independent Agent to sell the
shares, and the Independent Agent will sell the shares as soon as practicable
thereafter. Proceeds of the sale, less applicable brokerage fees and
commissions and service charges (as of the date of this Prospectus less than 10
cents per share) and any applicable taxes, will be sent to the Participant
within five business days after the sale has been completed by the Independent
Agent. The sales price will be determined in the same way as the price for
shares of Common Stock purchased for Participants on the open market. See
"Source and Price of Shares" above for explanation.
If the Administrator receives a request to sell shares (on which dividends
are not being reinvested) between the record date and the dividend payment date,
the sale will be made within five days after receipt of the request and the
proceeds from the sale will be sent to the Participant. Cash dividends will be
paid in the usual manner on the dividend payment date.
If the Administrator receives a request to sell shares (on which all or a
portion of the dividends are being reinvested) between the record date and the
dividend payment date, the dividends on those shares will be reinvested on the
Investment Date and newly purchased shares will be credited to the Participant's
account. If the request for sale does not include all shares in the
Participant's account, the number of shares requested will be sold within five
days after receipt of the request and the proceeds from the sale will be sent to
the Participant. Newly purchased shares will be retained in the Participant's
account after the Investment Date. If the request for sale covers all shares in
the Participant's account, the sale will be delayed until after the dividend
payment date and all shares, including newly acquired shares, will be sold
within five days after the Investment Date and the proceeds from the sale will
be sent to the Participant.
WITHDRAWAL, TRANSFERS AND GIFTS OF COMMON STOCK
Withdrawals and Transfers Outside the Plan. A Participant may withdraw
shares of Common Stock credited to his Plan account if he will continue to be
the record holder after withdrawal, by instructing the Administrator in writing,
by telephone or by facsimile or if the Participant will not be the record holder
after withdrawal, by delivering written instructions, specifying the recipient's
name, address, Social Security number and telephone number and a stock
assignment (stock power), with the Participant's signature guaranteed by a
member of the Medallion Signature Guarantee program (a participating broker,
bank, savings and loan association, etc.). If shares are to be sent to a
broker, the Participant must provide in writing the number of whole shares to be
transferred, the broker's name, business name, address, telephone number and the
brokerage account number, if applicable. Certificates representing whole shares
withdrawn from the Plan will be mailed to the Participant or designated
recipient within two business days of receipt of a properly documented request.
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 or (iii) the Participant terminates his participation in the
Plan.
If the Administrator receives a request to withdraw shares, on which
dividends are not reinvested, between the record date and the dividend payment
date, the withdrawal will be made within five days after receipt of the request
and dividends will be deposited in the account of the Participant holding the
shares prior to the withdrawal, in the usual manner, on the dividend payment
date.
If the Administrator receives a request to withdraw shares, on which all or
a portion of the dividends are reinvested, between the record date and the
dividend payment date, the dividends on those shares will be reinvested on the
Investment Date and newly purchased shares will be credited to the Participant's
account. If the request for withdrawal does not include all shares in the
Participant's account, the number of shares requested will be withdrawn within
two business days after receipt of the request and sent to the designated
recipient. Newly purchased shares will be retained in the account of the
Participant making the request after the Investment Date. If the request for
withdrawal covers all shares in the Participant's account, the withdrawal will
be delayed until after the dividend payment date and all shares, including newly
acquired shares, will be withdrawn within two business days after the Investment
Date. All shares in the Participant's account will be sent to the designated
recipient.
Gifts and Transfers of Common Stock Within the Plan. If a Participant
wishes to transfer all or a part of his shares to a Plan account for another
person, whether by gift, private sale or otherwise, the Participant may effect
the transfer by giving transfer instructions, in writing, to the Administrator.
Transfers of less than all of the shares in the
11
<PAGE>
Participant's account must be made in whole share amounts. Requests for such
transfers are subject to the same requirements applicable to transfers of Common
Stock generally, including the requirement of a stock power with a Medallion
Signature Guarantee. The transfer will be effected as soon as practicable
following the Administrator's receipt of the required documentation. Gifts and
transfers within the Plan are subject to the same provisions as described above
under "Withdrawals and Transfers Outside the Plan."
Shares transferred within the Plan will continue to be held by the
Administrator under the Plan. If the transferee is not already a Participant, a
Plan account will be opened in the name of the transferee, and the transferee
will automatically receive an Enrollment Form to elect any applicable services
offered through Investor's Choice. Until the transferee elects otherwise or the
transferor specifically requests that the new account be enrolled in one or more
of the Plan's options, such as dividend reinvestment, the transferee account
will be treated as having elected only to have shares held in safekeeping under
the Plan. If the transferee is already a Participant, the shares transferred
will be treated as other shares already in the account of the transferee with
respect to Plan options.
As a result of the transfer, the transferor and the transferee will receive
a statement confirming the transaction. The transferor may request that a
holiday or all occasion gift certificate be provided, either to the transferor
for personal delivery to the transferee or directly to the transferee, in
connection with a transfer.
REINVESTMENT OF DIVIDENDS ON REMAINING SHARES
When a Participant sells, withdraws or transfers a portion of the shares
credited to his account, the number of shares credited to his account is
reduced. For a Participant who is reinvesting cash dividends paid on only a
portion of the shares credited to his account, unless the Participant gives
specific instructions to the contrary, the reduction will first be made to the
number of shares for which reinvestment has not been elected before it is made
to the number of shares for which reinvestment has been elected. Accordingly,
after the sale, withdrawal or transfer, reinvestment of cash dividends will
continue on the remaining shares credited to the Participant's account up to the
number of shares designated for reinvestment prior to the sale, withdrawal or
transfer. For example, if a Participant who had elected to have cash dividends
reinvested on 50 shares of a total of 100 shares 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.
INDIVIDUAL RETIREMENT ACCOUNT
Investor's Choice offers Participants and interested investors an
opportunity to establish a self-directed IRA which specifically allows for the
reinvestment of cash dividends paid on Common Stock. The Investor's Choice IRA
is offered only to Participants and investors who reside in the United States or
its possessions or territories.
In order to purchase shares through an IRA under the Plan, a Participant
must execute an IRA Application Form and send it, together with an initial
contribution to the IRA Trustee. A minimum $1,000 initial purchase of Common
Stock or a rollover or transfer of Common Stock from another IRA or qualified
business retirement plan is required. The IRA Trustee will invest cash
contributions of the IRA, when instructed, into shares of Common Stock under the
Plan; however, the investment of IRA funds will not count against a
Participant's $120,000 maximum annual Plan investment limit.
In addition to the minimum enrollment and other Investor's Choice
requirements, the IRA must comply with the IRA Trust Agreement and regulations
governing IRAs under federal tax laws.
Self-Direction. Each IRA Participant is allowed to make investment
decisions with respect to the type and amount of investment in his IRA account.
An IRA Participant may invest in Common Stock only or in Common Stock and other
securities and assets, such as common stock of other corporations, mutual funds
or other Value Plus IRA-eligible (or administratively feasible) assets.
However, in order to participate through Investor's Choice, an IRA Participant
must either maintain a portion of his IRA assets in Common Stock and reinvest
100% of cash dividends on such stock into additional shares of Common Stock, or
make annual cash contributions for the purchase of Common Stock.
12
<PAGE>
Trustee. Each IRA account is required by law to have a trustee. The
Company has selected First Trust Corporation in Denver, Colorado to act as the
IRA Trustee for IRAs investing in Investor's Choice. First Trust is the largest
independent trust company for self-directed IRAs in the U.S. It allows dividend
reinvestment plans as "administratively feasible" investments for "self-
directed" Value Plus Individual Retirement Accounts. First Trust Corporation
and the Company are not affiliated or agents of one another, but have entered
into a working relationship solely to assist investors that desire to use
Investor's Choice in conjunction with a self-directed IRA. With respect to IRAs
established under the Plan, the IRA Trustee, rather than the investors
establishing the IRAs (the "IRA Participants"), will be the Investor's Choice
Participant. Accordingly, all communications with the Company regarding the
IRAs will be conducted by the IRA Trustee, who will receive the statements of
accounts and other written confirmations from the Administrator and will send
instructions, such as sale, transfer and withdrawal requests, to the
Administrator on behalf of the IRAs. As described below, the IRA Trustee will,
in turn, be responsible for maintaining all records and providing reports to
each IRA Participant.
Administration and Consolidated Reporting. The IRA Trustee maintains all
IRA related investment records, provides quarterly reports to each IRA
Participant consolidating all IRA assets and activities, including Common Stock,
into one convenient report and prepares and files any necessary Internal Revenue
Service reporting. The IRA Trustee maintains a full-time customer service staff
to answer IRA related questions and accept investment instructions from IRA
Participants. As IRA Trustee for self-directed Investor's Choice IRAs, First
Trust does not comment on the investment merits of any IRA asset.
Costs. The Company charges no fees to establish an IRA under Investor's
Choice. However, the IRA Trustee may charge fees for its plan maintenance and
administration. First Trust does not charge to establish a Value Plus IRA but
does charge $29 as an annual fee for maintenance of IRA accounts with balances
under $10,000. There is no annual maintenance fee for Value Plus customers with
account balances over $10,000. First Trust also does not charge transaction
fees for reinvesting dividends on Common Stock held in the IRA account.
The relationship between the IRA Participant and the IRA Trustee will be
governed by standing instructions and other agreements between the IRA
Participant and the IRA Trustee and will not be the responsibility of the Plan,
the Administrator or the Company. Neither the Plan, the Administrator nor the
Company will be liable for any of the IRA Trustee's acts or omissions relating
to an IRA Participant's account.
REPORTS TO PARTICIPANTS
Each Investor's Choice Participant will receive a quarterly statement of
year-to-date activity showing the amount invested, purchase price, the number of
shares purchased, deposited, sold, transferred and withdrawn, total shares
accumulated and other information. The Administrator will also send each
Participant a confirmation promptly after each cash investment, deposit, sale,
withdrawal or transfer. Dividend and interest reinvestments will not be
individually confirmed, but rather will appear on the quarterly statement.
Participants should retain statements and confirmations in their permanent
records to establish the cost basis of shares purchased under the Plan for
income tax and other purposes.
Each Participant will receive copies of all communications sent to holders
of Common Stock, including the Company's annual report to shareholders, notice
of the annual meeting, proxy statement and form of proxy, as well as federal tax
reporting statements, if applicable, for reporting taxable income received from
the Company.
All payments, notices, statements and reports will be sent to the
Participant's address on the Administrator's records; therefore, it is
imperative that Participants promptly notify the Administrator of any change of
address.
CERTIFICATES FOR SHARES
Shares of Common Stock purchased under, or deposited for safekeeping into,
the Plan and credited to Participants' accounts will be held in an automated
electronic record keeping system by the Administrator in its name or the name of
its nominee, as custodian. The number of shares, including fractional shares,
held for each Participant will be shown on each statement of account.
13
<PAGE>
Participants may obtain a certificate for all or part of the whole shares
held in their accounts at any time upon a written, telephone or facsimile
request to the Administrator. Requested certificates will be mailed, free of
charge, to the Participant within two business days after receipt of the request
by the Administrator. Any remaining whole or fractional shares will continue to
be held in the Participant's account by the Administrator.
Shares held in a Participant's account cannot be pledged or assigned. A
Participant who wishes to pledge or assign any such shares must request that
they be withdrawn and issued to the Participant in certificate form.
Certificates for fractional shares of Common Stock will not be issued under
any circumstances.
TERMINATION OF PARTICIPATION
A Participant may terminate participation in the Plan at any time by
notifying the Administrator in writing, by telephone or by facsimile. As soon
as practicable after receipt of notification, the Administrator will mail the
Participant (i) a certificate for all of the whole shares 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.
COSTS
The Company will pay all administrative costs and expenses of the Plan.
PARTICIPANTS WILL BEAR THE COST OF BROKERAGE FEES AND COMMISSIONS, RELATED
SERVICE CHARGES AND ANY APPLICABLE TAXES INCURRED ON ALL PURCHASES AND SALES OF
COMMON STOCK ON THE OPEN MARKET. Such costs will be included as adjustments to
the purchase and sale prices. As of the date of this Prospectus, the purchases
of shares are occurring on the open market, and the brokerage fees and
commissions and related service charges are not expected to exceed 10 cents per
share. There will be no brokerage fees and commissions or related services
charges for shares of Common Stock purchased directly from the Company.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES OF
PARTICIPATING IN INVESTOR'S CHOICE. TAX CONSEQUENCES WILL VARY AMONG
PARTICIPANTS DEPENDING UPON INDIVIDUAL CIRCUMSTANCES AND STATE, LOCAL AND
FOREIGN LAWS; THEREFORE, EACH PARTICIPANT SHOULD CONSULT HIS TAX ADVISOR AS TO
THE TAX CONSEQUENCES FOR HIM AS A RESULT OF PARTICIPATING IN THE PLAN.
A Participant will be required to include as income for federal income tax
purposes the gross amount of all dividends and interest payments (including any
original issue discount) on Eligible Securities reinvested in Common Stock as
though such dividends and interest payments were received by the Participant in
cash. A Participant's cost basis for shares of Common Stock acquired under the
Plan, in general, will be equal to the cash value of dividends and interest
payments attributable to the purchase of the shares (adjusted for brokerage
commissions and fees, services charges and applicable taxes, if any). A
Participant's cost basis in shares purchased with cash investments will be the
cost of the shares plus any allocable brokerage commissions or fees, service
charges and applicable taxes.
Shares of Common Stock purchased under the Plan will have a holding period
beginning on the day after the shares are allocated to the Participant's
account. A Participant will not realize any taxable income when he receives
certificates for whole shares credited to an account under the Plan. Gain or
loss will be recognized by the Participant when he sells such whole shares and
upon the sale of any fractional shares credited to his account under the Plan.
Under Internal Revenue Service backup withholding regulations, dividends
and interest payments reinvested under the Plan may be subject to the
withholding tax generally applicable to dividends and interest payments unless
the Participant provides the Administrator with the taxpayer identification
number (in the case of individual taxpayers the taxpayer identification number
is their Social Security number). Any amount so withheld will be treated as
taxable
14
<PAGE>
income received by the Participant and will be reflected on Forms 1099-DIV and
1099-INT mailed annually to all Company investors, including Plan Participants.
STOCK SPLITS, STOCK DIVIDENDS AND RIGHTS OFFERINGS
Any shares or other noncash distributions, including stock splits, stock
dividends, combinations, recapitalizations and similar events affecting the
Common Stock, will be credited to a 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
Participants have the exclusive right to vote all whole shares credited to
their Plan accounts, either in person or by proxy, at any annual or special
meeting of shareholders. Fractions of shares cannot be voted. The
Administrator will forward all shareholder materials relating to shares credited
to a Participant's account to the Participant.
LIMITATION OF LIABILITY
None of the Company, the Administrator or any Independent Agent will be
liable for any act done in good faith or for any good faith omission to act,
including, without limitation, any claim of liability arising from failure to
terminate a Participant's account upon the Participant's death prior to receipt
of notice in writing of such death, or with respect to the prices or times at
which shares of Common Stock are purchased or sold for Participants, or
fluctuations in the market value of Common Stock.
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 THE PLAN
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. 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 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.
TERMINATION OF PARTICIPATION BY THE COMPANY
If a Participant does not have at least one whole share of Common Stock
registered in his name or credited to his account, or does not own any Eligible
Securities for which cash dividends or interest payments are designated for
reinvestment under the Plan, the Participant's participation in the Plan may be
terminated by the Company upon written notice. Additionally, the Company may
terminate any Participant's participation in the Plan after written notice
mailed in advance to the Participant's address appearing on the records of the
Administrator. A Participant whose participation has been terminated will
receive (i) a certificate for all of the whole shares 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.
15
<PAGE>
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 more than once in any
three-month period. The primary consideration in determining the source of
shares 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 will be purchased in the open market, subject to the
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 and fees, related service charges and any applicable taxes incurred
on all purchases and sales made in the open market. Such costs will be included
as adjustments to purchase and sales prices. As of the date of this Prospectus,
such brokerage fees and commissions and related service charges are not expected
to exceed ten cents per share. There will be no brokerage fees and 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 700,000,000
shares of Common Stock, 10,000,000 shares of Preferred Stock, without par value,
and 10,000,000 shares of Preference Stock, without par value ("Preference
Stock"), of which 700,000 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. At
August __, 1997, there were __________ shares of Common Stock, 97,397 shares of
$4 Preferred Stock, _______ shares of Series B Preference Stock and no shares
of Series A Preference Stock issued and outstanding.
EXPERTS
The financial statements of the Company and of Old HI appearing in the
Company's and Old HI's Combined Annual Report on Form 10-K for their respective
fiscal years ended December 31, 1996, have been audited by Deloitte & Touche
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
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.
16
<PAGE>
================================================================================
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 REPRESENTATIONS 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.
-------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................ 2
Incorporation of Certain Documents by
Reference......................................................... 2
The Company.......................................................... 3
Application of Proceeds.............................................. 4
Houston Industries Incorporated
Investor's Choice Plan............................................ 5
Plan of Distribution................................................. 16
Description of Capital Stock......................................... 16
Experts.............................................................. 16
Legal Opinions....................................................... 16
</TABLE>
================================================================================
================================================================================
HOUSTON INDUSTRIES
INCORPORATED
5,000,000 Shares
Common Stock
(without par value)
--------------------
PROSPECTUS
--------------------
INVESTOR'S
CHOICE
PLAN
, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses payable by the
Company in connection with the sale of the Common Stock offered hereby.
Securities and Exchange Commission filing fee.... $ 31,576
Attorney's fees and expenses..................... 25,000
Listing fees..................................... 0
Independent auditors' fees and expenses.......... 10,000
Blue sky fees and expenses....................... 10,000
Printing expenses................................ 23,000
Miscellaneous expenses........................... 424
--------
Total expenses............................... $100,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02.A.(16) and Article 2.02-1 of the Texas Business Corporation
Act and Article V of Old HI's Amended and Restated Bylaws effective as the
Company's Bylaws upon the mergeer of Old HI with and into the Company provide
the Company with broad powers and authority to indemnify its directors and
officers and to purchase and maintain insurance for such purposes. Pursuant to
such statutory and Bylaw provisions, the Company has purchased insurance against
certain costs of indemnification that may be incurred by it and by its officers
and directors.
Additionally, Article IX of the Company's Restated Articles of
Incorporation, as amended, provides that a director of the Company is not liable
to the Company or its shareholders for monetary damages for any act or omission
in the director's capacity as director, except that Article IX does not
eliminate or limit the liability of a director for (i) breaches of such
director's duty of loyalty to the Company and its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) transactions from which a director receives an improper
benefit, irrespective of whether the benefit resulted from an action taken
within the scope of the director's office, (iv) acts or omissions for which
liability is specifically provided for by statute and (v) acts relating to
unlawful stock repurchases or payments of dividends.
Article IX also provides that any subsequent amendments to Texas statutes
that further limit the liability of directors will inure to the benefit of the
directors, without any further action by shareholders. Any repeal or
modification of Article IX shall not adversely affect any right of protection of
a director of the Company existing at the time of the repeal or modification.
See "Item 17. Undertakings" for a description of the Commission's position
regarding such indemnification provisions.
ITEM 16. EXHIBITS.
See Index to Exhibits at page II-5.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
II-1
<PAGE>
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section
do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, HOUSTON
LIGHTING & POWER COMPANY CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE
THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED
THIS REGISTRATION STATEMENT OR AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS,
ON JULY 28, 1997.
HOUSTON LIGHTING & POWER COMPANY
(Registrant)
By: /s/ Don D. Jordan
-----------------
(Don D. Jordan, Chairman and
Chief Executive Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
Signature Title Date
--------- ----- ----
/s/ Don D. Jordan Chairman, Chief Executive July 28, 1997
- ----------------------------- Officer and Director
(Don D. Jordan) (Principal Executive Officer
and Principal Financial Officer)
/s/ Mary P. Ricciardello Vice President and Comptroller July 28, 1997
- ------------------------------ (Principal Accounting Officer)
(Mary P. Ricciardello)
Director July 28, 1997
- ------------------------------
(William T. Cottle)
/s/ Charles R. Crisp Director July 28, 1997
- ------------------------------
(Charles R. Crisp)
Director July 28, 1997
- ------------------------------
(Jack D. Greenwade)
/s/ Lee W. Hogan Director July 28, 1997
- -------------------------------
(Lee W. Hogan)
/s/ Hugh Rice Kelly Director July 28, 1997
- -------------------------------
(Hugh Rice Kelly)
II-3
<PAGE>
Director July 28, 1997
- -------------------------------
(R. Steve Letbetter)
Director July 28, 1997
- -------------------------------
(David M. McClanahan)
/s/ Stephen W. Naeve Director July 28, 1997
- -------------------------------
(Stephen W. Naeve)
/s/ S. C. Schaeffer Director July 28, 1997
- -------------------------------
(S. C. Schaeffer)
Director July 28, 1997
- -------------------------------
(R. L. Waldrop)
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
REPORT OR SEC FILE OR
EXHIBIT REGISTRATION REGISTRATION EXHIBIT
NO. DESCRIPTION STATEMENT NUMBER REFERENCE
- ------- ---------------------------------------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
2.1* Agreement and Plan of Merger, among the Combined Form 8-K 1-3187 2
Company, Old HI, HI Merger and NorAm of the Company and 1-7629
Energy Corp. dated as of August 11, 1996 Old HI dated
August 11, 1996
2.2* Amendment to Agreement and Plan of Merger Registration 333-11329 2(c)
among the Company, Old HI, HI Merger and Statement on
NorAm Energy Corp. dated as of Form S-4
October 23, 1996
4.1* Restated Articles of Incorporation of Combined Form 10-Q of 1-3187 3
the Company (Restated as of May the Company and Old HI 1-7629
1993) for the quarter ended
June 30, 1993
4.2* Articles of Amendment to Restated Registration Statement 333-11329 3(b)
Articles of Incorporation of the on Form S-4
Company (dated August 9, 1996)
4.3* Articles of Amendment to Restated Articles Combined Form 10-K of 1-3187 3(c)
of Incorporation of the Company (dated the Company and Old HI 1-7629
December 3, 1996) for the year ended
December 31, 1996
4.4* Form of Amendments to Restated Articles
of Incorporation of the Company to be
effective as of the effective time of
the merger of Old HI with and into the
Company (included in Exhibit A to
Exhibit 2.2 above)
4.5* Amended and Restated Bylaws of Old Form 10-Q of Old HI 1-7629 3
HI (as of May 22, 1996) (Effective as for the quarter ended
the Company's Bylaws upon the June 30, 1996
Merger of Old HI with and into the
Company)
4.6* Form of Amended and Restated Rights Registration Statement 333-11329 4(b)(1)
Agreement between the Company and on Form S-4
Texas Commerce Bank National Association,
as Rights Agent, to be executed upon the
closing of the merger of Old HI with and
into the Company, including form of
Statement of Resolution Establishing
Series of Shares designated Series A
Preference Stock and form of Rights
Certificate
4.7+ Form of Houston Industries
Incorporated Amended and Restated
Investor's Choice Plan
5+ Opinion of Baker & Botts, L.L.P.
23.1 Consent of Deloitte & Touche LLP
23.2+ Consent of Baker & Botts, L.L.P.
(included in Exhibit 5)
24 Powers of Attorney
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
REPORT OR SEC FILE OR
EXHIBIT REGISTRATION REGISTRATION EXHIBIT
NO. DESCRIPTION STATEMENT NUMBER REFERENCE
- ------- ---------------------------------------- ------------ ------------ ---------
<C> <S> <C> <C> <C>
</TABLE>
- --------------------
* Incorporated hereby by reference as indicated.
+ To be filed by amendment.
II-6
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in the Registration
Statement of Houston Industries Incorporated on Form S-3 of our report dated
February 21, 1997, appearing in the Annual Report on Form 10-K of Houston
Industries Incorporated for the year ended December 31, 1996 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
- --------------------------------
DELOITTE & TOUCHE LLP
Houston, Texas
July 28, 1997
