Filed pursuant to Rule 424(b)(3)
Registration Statement No. 33-56013
PROSPECTUS
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E'TOWN CORPORATION
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Common Stock
(Without Par Value)
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The Dividend Reinvestment and Stock Purchase Plan (the "Plan") provides a
simple and convenient method for shareholders of E'town Corporation (the
"Company") to purchase shares of Common Stock of the Company without payment
of any brokerage commission or service charge.
The investment options offered under the Plan are either one or both of the
following:
Dividend Reinvestment - Reinvest dividends on all shares held or on less
than all shares held and continue to receive cash dividends on other
shares owned.
Cash Payments - Invest by making optional cash payments at any time in
an amount up to a total of $2,000 per calendar month (minimum $100 per
payment).
The price per share purchased under the Plan will be an amount equal to 95%
of the average of the high and low sale prices for the Company's Common
Stock, as reported in the New York Stock Exchange Composite Transactions, for
each of the five consecutive trading days ending with the Investment Date.
The Company reserves the right to give notice at any time that, effective
with a specified Investment Date following such notice, the price per share
purchased under the Plan with reinvested dividends, optional cash payments or
both will be an amount equal to 100% of the average of such reported high and
low prices.
This Prospectus relates to 505,250 authorized and unissued shares of Common
Stock of the Company for use under the Plan.
This Prospectus should be retained for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is November 14, 1994.
<PAGE>
AVAILABLE INFORMATION
E'town Corporation ("E'town" 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, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements 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 be obtained from the Public Reference Section of the Commission at its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, material filed by the Company can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The Company has filed with the Commission a Registration Statement
on Form S-3 with respect to the offering made hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement
and the exhibits thereto. Copies of the Registration Statement and the
exhibits thereto may be inspected without charge at offices of the
Commission, and copies of all or any portion thereof may be obtained from the
Commission upon payment of the prescribed fees.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission
are incorporated by reference into this Prospectus and made a part hereof as
of their respective dates:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1994, June 30, 1994 and September 30, 1994.
3. The description of the Company's common stock purchase rights
contained in the Company's Registration Statement on Form 8-A,
dated February 4, 1991.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated
by reference in this Prospectus and 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 Sections 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 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 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 information relating to the Company and its subsidiaries does
not purport to be comprehensive. Additional information concerning the
business and affairs of the Company and its subsidiaries, including recent
regulatory orders and pending regulatory proceedings, descriptions of certain
regulations to which these companies are subject, and their capital
requirements and resources, is contained in the Incorporated Documents.
The Company 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, Chief Financial Officer and Treasurer, E'town
Corporation, 600 South Avenue, Westfield, New Jersey 07091-0788; Telephone:
(908) 654-1234.
No person is authorized to give any information or make any
representation not contained, or incorporated by reference, in this
Prospectus, and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company. This Prospectus
is not 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 nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof.
<PAGE>
THE COMPANY
The Company, a New Jersey corporation, is a holding company whose
principal subsidiary, Elizabethtown Water Company ("Elizabethtown"), is a
regulated water utility, one of whose corporate predecessors was first
incorporated in 1854. The Company was formed in 1985 to become the holding
company for Elizabethtown pursuant to a reorganization approved by
Elizabethtown's stockholders and the New Jersey Board of Public Utilities
(the "BPU"). The Mount Holly Water Company ("Mount Holly") is a wholly-owned
subsidiary of Elizabethtown. E'town and its non-regulated subsidiary, E'town
Properties, Inc. ("Properties"), currently own approximately 740 acres of
land in New Jersey which are either held for sale or are in the process of
being zoned and permitted with a view to future sale. The Company has no
plans to acquire additional real estate.
Elizabethtown and 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 area,
Elizabethtown and Mount Holly serve a population of approximately 560,000 at
retail and provide, on a wholesale basis, a portion of the water requirements
of eight municipal entities and three investor-owned water utilities. All of
the Company's consolidated revenues are currently contributed by the
Company's water utility business. At December 31, 1993, Elizabethtown,
together with Mount Holly, was the seventh largest investor-owned water
utility in the United States, based on gallons of water pumped annually.
Elizabethtown and Mount Holly are subject to regulation by the BPU with
respect to rates and service, the issuance and sale of securities,
classification of accounts, mergers, and other matters. Elizabethtown 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.
Because Elizabethtown expects its rate base to grow more quickly than
pumpage over the next several years, Elizabethtown filed for a rate increase
in August 1994, and will file regularly thereafter, so that it may have the
opportunity to realize satisfactory returns on equity. Adequate equity
returns will be necessary for E'town and Elizabethtown to continue to attract
external capital to finance improvements necessary to maintain safe and
adequate service. Future earnings of Elizabethtown and, in turn, the Company
will be primarily affected by weather and customer usage, the magnitude and
timing of capital expenditures, the rate of growth of revenues and expenses,
and the adequacy and timeliness of regulatory relief.
The Company's executive offices are located at 600 South Avenue,
Westfield, New Jersey 07091-0788. Its telephone number is (908) 654-1234.
DESCRIPTION OF THE PLAN
Purpose
1. What is the purpose of the Plan?
The purpose of the Plan is to provide Stockholders of record of the
Common Stock of the Company with a convenient method of investing cash
dividends and cash payments in shares of the Company's Common Stock without
payment of any brokerage commission or service charge. Since such shares will
be purchased from the Company, the Company will receive additional funds for
its general corporate purposes, including investments in its subsidiaries.
Advantages
2. What are the advantages of the Plan?
Stockholders who elect to participate in the Plan ("Participants")
may (a) have cash dividends on some or all of the shares of Common Stock
registered in their names automatically reinvested in new issue shares of
Common Stock each quarter, and/or (b) make cash payments up to $2,000 per
calendar month (minimum $100 per payment) to purchase additional shares of
Common Stock. Dividends on shares purchased under the Plan with cash
payments or reinvested dividends will automatically be reinvested in
additional stock.
Participants can purchase stock at 95% of the prevailing market
price, subject to the Company's right to give notice of its determination to
change such price per share to 100% of the prevailing market price for the
Company's Common Stock (See Question 12). No commission or service charge is
paid by Participants in connection with purchases under the Plan. Full
investment of funds is possible because the Plan permits fractions of shares,
as well as full shares, to be credited to Participants' accounts. In
addition, dividends with respect to such fractions, as well as with respect
to full shares, will be credited to Participants' accounts and reinvested in
new shares of Common Stock under the Plan. Since certificates are not issued
for shares under the Plan, Participants avoid the cumbersome safekeeping of
certificates for shares credited to their accounts under the Plan. Regular
statements of accounts will provide simplified record keeping for
Participants.
Participation
3. Who is eligible to participate?
All holders of record of at least 20 shares of Common Stock
("Stockholders") are eligible to participate in the Plan. In order to be
eligible to participate in the Plan, beneficial owners of shares of the
Company's Common Stock whose shares are registered in names other than their
own must become registered Stockholders by having their shares transferred
into their names. In addition, to remain eligible to participate in the
Plan, a Participant must continue to be the record holder of at least 20
shares of Common Stock. If at any time a Participant holds less than 20
shares of Common Stock as holder of record, then the Company will stop
reinvesting dividends and will not accept any optional cash payments on such
Participant's shares under the Plan unless and until such time as such
Participant once again becomes eligible to participate and elects to do so by
completing and returning the required Authorization Form. (See Question 4).
In addition, the Company may give notice that, effective with a
future date to be specified and on such terms and conditions as may be
specified in such notice, up to two members at least 18 years of age of a
household served by Elizabethtown or Mount Holly may become Participants in
the Plan. Such eligible individuals are referred to as "Customers" for the
remainder of this document. (For the sake of convenience, the Plan is
drafted as if Customers are eligible to participate currently.)
The Company reserves the right to exclude any Participant from
participation in the Plan upon giving notice of such exclusion by registered
mail sent to such Participant's address as reflected on the Company's
records. In addition, if it appears to the Company that any Participant is
using or contemplating the use of the optional cash payment investment
mechanism in a manner or with an effect that, in the sole judgment and
discretion of the Company, is not in the best interests of the Company or its
other shareholders, then the Company may decline to issue all or any portion
of the shares of Common Stock for which any optional cash payment by or on
behalf of such Participant is tendered. Such optional cash payment (or the
portion thereof not to be invested in shares of Common Stock) will be
returned by the Company as promptly as practicable, without interest.
4. How does an eligible person participate?
Stockholders and Customers may join the Plan by filling out the
Authorization Form and returning it to The Bank of New York, as agent under
the Plan ("Agent"). An Authorization Form may be obtained at any time upon
request. See Question 8 for details.
Some Stockholders may have shares registered in more than one name
(for example, some shares registered in the name of "John Smith" and others
registered in the name of "J. Smith"). In such situations, the Stockholder
will receive an Authorization Form for each registration. If this occurs,
the Stockholder has the choice of signing and returning any of the
Authorization Forms, but dividends will be reinvested only for those shares
for which Authorization Forms are signed and returned.
5. When may an eligible person join the Plan?
An eligible person may join in the Plan at any time by sending a
signed Authorization Form to the Agent.
For dividends to be reinvested in additional shares of Common
Stock, the Agent must receive the Authorization Form on or prior to the
record date for a cash dividend payment. If the Authorization Form is
received by the Agent after such record date, reinvestment of dividends will
not begin until the dividend payment date following the next record date.
The record date will generally precede the dividend payment date by 15 days.
Dividend payment dates are expected to be the last business day of March,
June, and September, and a day during the third week of December. (See
Question 11.)
For cash payments to be reinvested in additional shares of Common
Stock, the Agent must receive the Authorization Form and, after the
Participant has enrolled in the Plan, any cash payments, at least five
business days before the Investment Date. For any month when a dividend is
paid, the Investment Date and dividend payment date are the same. For other
months, the Investment Date is the last business day of the month. (See
Questions 11 and 13.) No interest is paid on cash payments received by the
Agent prior to an Investment Date.
Customers will be eligible to join the Plan only if the Company
gives the notice described in the answer to Question 3.
6. What does the Authorization Form provide?
First, the Participant provides necessary identifying information
such as name, address and Taxpayer Identification Number or social security
number, and also signs the form. If the Participant is a Customer, he must
also provide his customer account number.
Second, the Participant elects his/her investment option by
checking one or both of the following options:
a) By checking the box marked "Dividend Reinvestment", the
Participant elects to have the Agent reinvest dividends paid
on some or all of the Participant's shares of Common Stock in
additional shares of Common Stock. The accompanying blank
allows the Participant to specify the number of shares for
which dividends will be reinvested. (If the blank is not
filled in, dividends on ALL shares owned will be reinvested.)
b) By checking the box marked "Cash Payment" and enclosing a
check or money order payable to The Bank of New York, the
Participant elects to purchase shares of Common Stock.
Shares purchased using either the "Dividend Reinvestment" or "Cash
Payment" option will be deposited into the Participant's Plan account and
dividends on such shares will be automatically reinvested.
7. May a Participant change investment options after becoming a
Participant?
Yes. A Participant may change his or her investment option by
signing a new Authorization Form and returning it to the Agent. The change
in participation will become effective in the same manner as an initial
enrollment in the Plan as provided under Question 5. If a Participant elects
to participate through the reinvestment of dividends but later decides to
reduce the number of shares on which dividends are being reinvested or to
participate through the cash payment feature only, the Authorization Form
indicating such change of options must be received by the Agent on or prior
to the record date for a dividend payment in order to stop the unwanted
reinvestment of dividends payable on the following dividend payment date.
It should be remembered that even if the Participant is enrolled only in the
optional cash payment feature, the Agent will reinvest all dividends of
shares credited to the Participant's Plan account.
8. Where should correspondence regarding the Plan be directed to?
All requests for termination of participation sales, optional cash
payments or change of address should be directed to:
The Bank of New York
Dividend Reinvestment Department
P.O. Box 1958
Newark, NJ 07101-9774
All correspondence regarding the Plan should be addressed to the
Agent at the following address:
The Bank of New York
Shareholder Services Department
P.O. Box 11258
New York, NY 10277-0758
Telephone: (800) 524-4458
Please utilize the tear-off stub portion of your statement when requesting
termination of participation, sales, optional cash payments or change of
address.
The Telephone Response Center of the Agent is available Monday through
Friday, 8 A.M. to 6 P.M. Eastern Time. When calling, please identify
yourself as a holder of E'town Corporation Common Stock and please provide
your name as it appears on your stock certificate or Plan statement, as well
as your tax identification number.
Costs
9. Are there any expenses to Participants in connection with purchases
under the Plan?
No. There are no brokerage fees because shares are purchased from
the Company. All costs of administration of the Plan are to be paid by the
Company. However, certain charges as described in the answer to Question 21
may be incurred by the Participant in the event he or she withdraws from the
Plan or in the event of termination of the Plan by the Company.
Purchase
10. How many shares of Common Stock will be purchased for Participants?
The number of shares to be purchased depends on the amount of the
Participant's dividends being reinvested, the amount of cash payments and the
applicable purchase price per share of Common Stock. Each Participant's
account will be credited with the number of shares, including fractions
computed to four decimal places, equal to the total amount to be invested
divided by the applicable purchase price per share.
11. When will the shares of Common Stock be purchased under the Plan?
Shares of Common Stock will be purchased under the Plan on the
following dates (each an "Investment Date"). Dividends will be invested as
of the dividend payment date (dividend payment dates are expected to be the
last day of March, June, September and a day during the third week of
December). Optional cash payments will be invested as of each Common Stock
dividend payment date and as of the last business day of each month in which
there is not a Common Stock dividend payment date.
12. What will be the price of shares of Common Stock purchased under the
Plan?
The price per share purchased under the Plan will be an amount
equal to 95% of the average of the high and low sale prices for the Company's
Common Stock, as reported in the New York Stock Exchange Composite
Transactions, for each of the five consecutive trading days ending with the
Investment Date. The Company reserves the right to give notice at any time
that, effective with a specified Investment Date following such notice, the
price per share purchased under the Plan with reinvested dividends, optional
cash payments or both will be an amount equal to 100% of the average of such
reported high and low Common Stock prices.
Optional Cash Payments
13. How does the optional cash payment option work?
Each Participant in the Plan may invest in additional shares of
Common Stock by making optional cash payments at any time. There is no
obligation to make any cash payment. The amount of each cash payment must be
at least $100, and the total cash payments invested may not exceed $2,000 per
calendar month. Cash payments will be invested once each month (see Question
11).
Optional cash payments by Customers may not be submitted with
payments of their
utility bills.
When enrolling in the Plan, cash payments may be made by enclosing
a check or money order (payable in United States dollars to The Bank of New
York) with the Authorization Form sent to the Agent. Thereafter, cash
payments may be made by sending a check or money order to the Agent along
with the stub attached to the quarterly statement of account which will be
sent to each Participant by the Agent. The Agent will return any second or
third party checks endorsed by you to the Company or to The Bank of New York.
Also, foreign checks not drawn on a United States bank and not payable in
United States dollars will be returned to the Participant.
Cash payments must be received by the Agent not later than the
fifth business day before the optional cash payment Investment Date for each
month (see Question 11). Cash payments not received in time are held in
anticipation of the next Investment Date. No interest will be paid by the
Company or the Agent on funds pending their investment in Common Stock.
A Participant may, without withdrawing from the Plan, receive the
return of any optional cash payment upon written request received by the
Agent not later than the fifth business day prior to the Investment Date.
Reports to Participants
14. What kind of reports will be sent to Participants in the Plan?
Each participant in the Plan will receive a quarterly statement.
Each statement will show the number of shares of Common Stock distributed to
the Participant and deposited in the Participant's Plan account during the
quarter, the date of each distribution and the fair market value of the
shares on the date distributed. These statements are a Participant's
continuing record of the cost of his purchases and should be retained for
income tax purposes. In addition, each Participant will receive a copy of
each Prospectus prepared for the Plan and copies of the same communications
sent to all holders of Common Stock, including current Quarterly Reports to
Stockholders, the Annual Report, the Notice of Annual Meeting of Stockholders
and Proxy Statement, and IRS information for reporting dividends paid.
Dividends
15. How will dividends be paid on shares held in Plan accounts?
Dividends on whole shares, and any fraction of a share, held for
the Participant's account under the Plan will be automatically reinvested in
additional shares of the Company's Common Stock and credited to the
Participant's Plan account. If a Participant wishes to be paid cash
dividends by check on any shares held for the Participant's Plan account, the
Participant must request that those shares be withdrawn from the Plan and
that certificates for those shares be issued to him or her (see Question 16).
Certificates for Shares
16. Will certificates be issued for shares of Common Stock purchased under
the Plan?
Normally, certificates for shares of Common Stock purchased under
the Plan will not be issued to Participants. The number of shares credited
to an account under the Plan will be shown on each statement of account
mailed to the Participant. This convenience protects against loss, theft or
destruction of certificates.
Certificates for any number of whole shares credited to an account
under the Plan will be issued upon the request of such Participant, and the
issuance of such certificates will not terminate the Participant's
continuation of the Plan with respect to the remaining shares so long as such
Participant continues to be the holder of record of at least 20 shares of
Common Stock. Any such request should be mailed to the Agent (See Question
8). Dividends on any full shares and fraction of a share remaining in the
Participant's Plan account will continue to be automatically reinvested in
additional shares of Common Stock and credited to the Participant's account.
Shares credited to the account of a Participant's Plan account may
not be pledged as collateral. A Participant who wishes to pledge such shares
must request that certificates for such shares be removed from the Plan and
issued in his or her name.
An institution that is required by law to maintain physical
possession of certificates should request the issuance of certificates for
Common Stock purchased under the Plan after each dividend reinvestment has
been completed. This request should be mailed to the Agent (See Question 8).
Certificates for fractional shares will not be issued under any
circumstances.
17. Does the Company or the Agent (i) provide safekeeping of certificates
held by Stockholders or (ii) accept shares registered in a Participant's name
for deposit to the Plan account of such Participant?
No. Neither the Company nor the Agent provide safekeeping of
Stockholders' certificates, nor will either of them accept certificates for
shares registered in a Participant's name for cancellation and deposit in
such Participant's Plan account.
18. In whose name will certificates be registered when issued?
Accounts for Stockholders participating in the Plan are maintained
in the names in which such Stockholders' certificates were registered at the
time they entered the Plan. Consequently, certificates for whole shares
issued upon the request of such Stockholder Participants withdrawing shares
from the Plan will be treated in a routine manner and similarly registered.
Accounts for Customers participating in the Plan are maintained
based upon the identifying information provided by the Customer on the
Authorization Form when the Customer entered the Plan. Consequently,
certificates for whole shares issued upon the request of such Customer
Participants will be similarly registered.
Withdrawal
19. When may a Participant withdraw from the Plan?
A Participant may stop all investment on an Investment Date if
notice of withdrawal from the Plan is received by the Agent not later than
five business days prior to the dividend payment date, in the case of
reinvestment of dividends, or the next Investment Date, in the case of cash
payments. Any dividend or cash payment investment which has been stopped by
withdrawal from the Plan will be remitted by the Agent to the former
Participant.
20. How does a Participant withdraw from the Plan?
In order to withdraw from the Plan, a Participant must notify The
Bank of New York (see Question 8), as Agent, that the Participant wishes to
withdraw from the E'town Corporation Dividend Reinvestment and Stock Purchase
Plan and give his or her account number. The tear-off stub attached to the
bottom of your quarterly statement of account should be used for this
purpose. This may be done by checking the appropriate box on the back of the
stub, signing and returning the stub to the Agent.
21. How are shares distributed when a Participant withdraws from the Plan or
the Plan is terminated?
When a Participant withdraws from the Plan or on termination of the
Plan by the Company, certificates for whole shares credited to his or her
account under the Plan and a cash payment representing any fraction of a
share will be mailed directly to the Participant. Any such cash payment will
be based on the then current market price of the Company's Common Stock.
Upon his or her withdrawal from the Plan, the Participant may also
request that all of the shares, both whole and fractional, credited to his or
her account, be sold. If he or she requests such sale, the sale will be made
for the account of the Participant by the Agent at the market price within
ten trading days after receipt of the request. The Participant will receive
the proceeds of the sale less any applicable brokerage commission and
transfer tax.
22. Can the Participant direct the Agent to sell a portion of his shares
held in his Plan account?
Yes. The Participant will receive the proceeds of the sale less
any applicable brokerage commission and transfer tax.
23. If a Customer moves outside Elizabethtown's service territory or
otherwise ceases to be a Customer, may this person continue to
participate in the Plan?
Yes, so long as this person continuously maintains at least 20
shares registered in his or her name.
24. What are the federal income tax consequences of participation in the
Plan?
Generally, any cash dividend which is reinvested under the Plan
will be taxable as if it had been received by the Participant, even though
the Participant does not actually receive it in cash but, instead, uses it to
purchase shares under the Plan. In this manner, Participants are treated the
same as Stockholders who are not Participants in the Plan.
In addition, the difference between the price of shares acquired
through the reinvestment of dividends and the fair market value of those
shares (for federal income tax purposes) will be treated as additional
dividend income to the Participant. This means that both the amount of the
dividend which is reinvested and the amount of the discount from fair market
value at which the shares are acquired will be taxable to the participant at
ordinary income rates in the year the shares are purchased. Likewise, the
discount at which shares are acquired with cash payments will be taxable as
additional dividend income.
A Participant's tax basis for shares acquired under the Plan with
reinvested dividends will be equal to the amount paid for the shares (i.e.,
the amount of the reinvested dividend) plus the amount of the discount from
fair market value included in the Participant's taxable income. The tax
basis for shares acquired under the Plan with cash payments will be the
amount of the cash payments plus the amount of the discount from fair market
value which was taxable as a dividend.
A Participant will not realize any taxable income when he or she
receives certificates for whole shares credited to his or her account under
the Plan either upon his or her request for certificates for certain of those
shares or upon withdrawal from or termination of the Plan. However, a
Participant who receives, upon withdrawal or termination of the Plan, a cash
adjustment for a fractional share credited to his or her account may realize
a gain or loss. Gain or loss may also be realized by the Participant when
whole shares are sold either by the Agent upon the Participant's request when
he or she withdraws from the Plan (see Question 21) or by the Participant
himself or herself after withdrawal from the Plan. The amount of such gain
or loss will be the difference between the amount which the Participant
receives for his or her shares or fractional share, and his or her tax basis
therefor.
In the case of a Participant who is subject to "backup
withholding," i.e. a Participant that has failed to provide the Agent with a
valid taxpayer identification number, the Agent will withhold the amounts
required to be withheld before the purchase of shares of Common Stock. The
quarterly statements confirming purchases made for such Participants will
indicate the net dividend payment reinvested.
The information set forth in this Question 24 is a summary only and
does not purport to be complete. Each Plan Participant is advised to consult
with his or her own tax advisor regarding specific questions. The statement
of account sent to Participants should be retained for this purpose. In
addition, there may be tax considerations under foreign, state and local law
applicable to Participants.
25. What provision is made for foreign Stockholders subject to income tax
withholding?
In the case of foreign Stockholders (non-resident aliens, foreign
corporations and certain other foreign persons) who elect to have their
dividends reinvested and whose dividends are subject to United States income
tax withholding, the Company will withhold the amounts required to be
withheld before the purchase of shares of Common Stock. The quarterly
statements confirming purchases made for such foreign Participants will
indicate the net dividend payment reinvested.
26. What happens when a Stockholder sells or transfers all or a portion of
the shares registered in his name?
If a Participant disposes of all of the shares of Common Stock
registered in the Participant's name, other than shares credited to his Plan
account, the Agent will continue to reinvest the dividends on the shares
credited to the Participant's Plan account until the Participant notifies the
Agent that he or she wishes to withdraw from the Plan. Prior to such
withdrawal, cash payments may continue to be made by the Participant as long
as there are shares credited to his or her Plan account.
If a Participant who has only a portion of his or her dividends
reinvested pursuant to the Plan disposes of shares of stock to the extent
that he or she has registered in his or her name fewer shares than the number
indicated on the Authorization Form as the shares for which dividends are to
be reinvested, the Agent will deem all remaining shares registered in the
Participant's name as credited to his or her Plan account and will reinvest
dividends on all such shares. A Participant may change his or her investment
options, however, in the manner provided in the answer to Question 7 above.
27. What happens if the Company has a rights offering, issues a stock
dividend or declares a stock split?
A Participant's entitlement in a rights offering will be based upon
total holdings: those shares of Common Stock registered in the Participant's
name, if any, on the books of the Company and those credited to his or her
account under the Plan. Rights with respect to all shares will be mailed
directly to the Participant. However, rights will be issued to the
Participant for the number of whole shares only and rights based on a
fraction of a share held in a Participant's account will be sold and the net
proceeds will be applied as a cash payment to purchase new issue shares of
Common Stock under the Plan on the next Investment Date.
Stock dividends distributed on shares held by, and registered in
the name of, a Participant on the books of the Company, as well as shares
distributed on account of any split of such shares, will be mailed directly
to the Participant. Additional shares resulting from stock dividends or
stock splits on shares credited to a Participant's account in the Plan will
be credited to the Participant's account.
28. How will a Participant's shares be voted at meetings of Stockholders?
Whole shares credited to the account of a Participant under the
Plan will be added to the shares registered in the Participant's name, and
the proxy on the combined total will be furnished to the Participant.
Fractional shares cannot be voted.
If no instructions are indicated on a properly signed and returned
proxy card, all of the whole shares will be voted in accordance with the
recommendations of the Company's management. If the proxy card is not
returned or is returned unsigned, none of the Participant's shares will be
voted unless the Participant, or the Participant's duly appointed
representative, votes in person at the meeting.
29. May the Plan be changed or discontinued?
The Company reserves the right to amend, modify, suspend or
terminate the Plan at any time, including, without limitation, to change the
price applicable to shares purchased by Participants under the Plan (see
Questions 3 and 12). All Participants will receive notice of any such
amendment, modification, suspension or termination, which notice may be
before or after the fact. Any uninvested funds held by the Agent at the time
of any suspension or termination of the Plan will be remitted by the Agent to
the Participants. The Agent reserves the right to resign at any time upon
reasonable notice to the Company in writing and the Company may elect and
appoint a new Agent, including itself or its nominee, at any time.
30. What is the responsibility of the Company and the Agent under the Plan?
The Company and the Agent will not be liable for any act done in
good faith or for any good faith omission to act, including, without
limitation, any claim of liability arising out of failure to purchase shares
or terminate a Participant's account upon such Participant's death prior to
receipt of notice in writing of such death or with respect to any fluctuation
in market value before or after purchase or sale of Common Stock.
PARTICIPANTS SHOULD RECOGNIZE THAT NEITHER THE COMPANY NOR THE
AGENT CAN ASSURE THEM OF A PROFIT OR PROTECT THEM AGAINST A LOSS ON THE
SHARES OF COMMON STOCK PURCHASED UNDER THE PLAN.
USE OF PROCEEDS
The Company has no basis for estimating the number of shares of
Common Stock that will ultimately be purchased under the Plan or the prices
at which such shares will be sold. The net proceeds realized by the Company
from shares of Common Stock sold under the Plan will be added to the general
funds of the Company and used for general corporate purposes, including
investments in its subsidiaries.
DESCRIPTION OF COMMON STOCK
Certain provisions of the Company's Certificate of Incorporation and By-
Laws and Elizabethtown's Restated Certificate of Incorporation and
Elizabethtown's indentures are summarized or referred to below. The
summaries are merely an outline, do not purport to be complete, do not relate
to or give effect to the provisions of statutory or common law, and are
qualified in their entirety by express reference to such Certificates of
Incorporation, By-Laws and indentures.
The Company is authorized by its Certificate of Incorporation to issue
15,000,000 shares of Common Stock, without par value, of which 6,552,927
shares were issued and outstanding as of September 30, 1994. As of September
30, 1994, the Company has agreed to keep reserved for issuance 307,475 shares
of Common Stock to satisfy the privileges of the Company's subordinated
debentures which are convertible into Common Stock at a conversion price of
$40.00 per share, subject to adjustment.
The holders of Common Stock of the Company are entitled to receive
dividends as and when declared by the Board of Directors of the Company out
of funds legally available for dividends. Payment of common stock dividends
by Elizabethtown (which currently constitutes the predominant source of cash
from earnings available to the Company) is restricted by certain provisions
of the seven indentures under which debentures of Elizabethtown are
outstanding. At August 31, 1994, $7,836,668 of Elizabethtown's retained
earnings were restricted under the most restrictive of these indenture
provisions. Therefore, $37,490,097 of E'town's consolidated retained
earnings were unrestricted. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities. The holders of
record of Common Stock are entitled to one vote for each share of such stock
held by them. The holders of Common Stock have no cumulative voting,
preemptive or conversion rights and are not subject to further calls or
assessments by the Company. There are no redemption or sinking fund
provisions applicable to the Common Stock. The Common Stock currently
outstanding is, and the Common Stock offered pursuant to this Prospectus will
be, fully paid and non-assessable.
At the Annual Meeting of Shareholders on May 6, 1991, holders of the
Company's Common Stock adopted an amendment to the Company's Certificate of
Incorporation which provided for, among other things, a classified Board of
Directors. Such amendment may only be amended or repealed by the affirmative
vote of the holders of at least 80% of the Company's Common Stock. Also in
May 1991, the Board of Directors approved revisions to the Company's By-Laws
which provided for, among other things, certain notice requirements for
business to be properly brought by shareholders before an annual or special
meeting of shareholders, certain procedures for the nomination of directors
by shareholders, the fixing of record dates with respect to action to be
taken by shareholder vote or by written consent, and the calling of special
meetings of shareholders pursuant to a vote of the Board of Directors, action
by the Chairman or a request of shareholders holding at least 40% of the
capital stock of the Company.
The outstanding Common Stock of the Company is traded on the New York
Stock Exchange. The Bank of New York is the Registrar and Transfer Agent for
the Common Stock of the Company.
On January 24, 1991, pursuant to a shareholders' rights plan adopted by
the Company, the Board of Directors of the Company declared a dividend of one
share purchase right (a "Right") for each outstanding share of Common Stock
(the "Shares") of the Company. The dividend was paid on February 4, 1991
(the "Record Date") to the shareholders of record on that date. Generally,
each share of Common Stock issued after the Record Date, including the shares
of Common Stock offered hereby, carries one Right. Each Right entitles the
registered holder to purchase from the Company 1/100th of one Share at a
price of $.80 per 1/100th of one Share, subject to adjustment. Until the
occurrence of certain specified events, including the acquisition by certain
third parties of a large amount of Common Stock or attempts to acquire the
Company, the Rights are not exercisable, have no dilutive effect, are
evidenced by the certificates for the shares of the Company's Common Stock
and will be transferred only with such securities. A more complete
description of the Rights is set forth in the Company's Registration
Statement on Form 8-A, as amended, and the exhibits thereto, which
description has been incorporated by reference herein. See "Incorporation of
Certain Information by Reference."
LEGAL MATTERS
The legality of the Common Stock offered hereby has been passed
upon for the Company by Walter M. Braswell, Esq., Secretary of the Company.
As of September 30, 1994, Mr. Braswell owned approximately 5,127 shares of
the Company's Common Stock.
EXPERTS
The financial statements and the related financial statement
schedules incorporated in this prospectus by reference from the Company's
Annual Report on Form 10-K have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
INDEMNIFICATION
New Jersey law permits, and the Company's By-Laws provide, that the
Company shall, under certain circumstances, indemnify its directors and
officers against liabilities, including liabilities arising under the
Securities Act of 1933 (the "Securities Act"). Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to
directors or officers pursuant to the Company's By-Laws, the Company has been
informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
