PROSPECTUS Filed Pursuant to Rule 424(b)(2)
Registration No. 333-128606
NORDIC AMERICAN TANKER SHIPPING LIMITED
DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN
1,664,450 Common Shares, $0.01 Par Value
We are an international tanker company that owns modern double-hull Suezmax
tankers. With this Prospectus we are offering you the opportunity to participate
in our Dividend Reinvestment and Direct Stock Purchase Plan, or the "Plan." The
Plan allows our existing shareholders to increase their holdings of our common
shares and gives new investors an opportunity to make an initial investment in
our common shares.
PLAN HIGHLIGHTS
o If you are an existing shareholder, you may purchase additional common
shares by reinvesting all or a portion of the dividends paid on your
common shares and by making optional cash investments of not less than
$50 each and up to a maximum of $10,000 per month. In some instances,
we may permit optional cash investments in excess of this maximum.
o If you are a new investor, you may join the Plan by making an initial
investment of not less than $250 and up to a maximum of $10,000. In
some instances, we may permit initial investments in excess of this
maximum.
o As a participant in the Plan, you may authorize electronic deductions
from your bank account for optional cash investments.
o We may offer discounts ranging from 0% to 5% on optional and initial
cash investments that are made pursuant to a request for waiver (i.e.,
on investments that are in excess of $10,000). At our discretion the
discount may be offered at variable rates on one, all or a combination
of the sources of investments or not at all.
Investing in our common shares involves risks. You should consider certain
risk factors before enrolling in the Plan. See "Risk Factors" on page 2 of this
Prospectus and the documents incorporated herein by reference for more
information. We suggest you retain this Prospectus for future reference.
Our common shares are listed on the New York Stock Exchange under the
symbol "NAT." The last reported sales price of our common shares on November 4,
2005 was $32.33.
Unless specifically noted otherwise in this Prospectus, all references to
"we," "us," "our," or the "Company" refer to Nordic American Tanker Shipping
Limited and its subsidiaries.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is November 7, 2005.
TABLE OF CONTENTS
Page
RISK FACTORS..................................................................2
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS....................3
AVAILABLE INFORMATION.........................................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................4
THE COMPANY...................................................................5
DESCRIPTION OF THE PLAN.......................................................5
1. What is the Plan?......................................................5
2. What features does the Plan offer?.....................................5
3. Who is the Plan Administrator and what does the Plan
Administrator do?......................................................6
4. How do I contact the Plan Administrator?...............................6
5. How do I enroll in the Plan if I am an existing shareholder
and my common shares are registered in my name?........................7
6. My shares are held in "street name." How do I enroll in the
Plan if I am an existing shareholder and my common shares are
registered in the name of my broker, bank or other nominee?............7
7. How do I enroll if I am not currently a shareholder?...................8
8. What are the fees associated with participation?.......................8
9. What are my options for additional cash investments once I am
enrolled in the Plan?..................................................9
10. What are my reinvestment options?......................................9
11. Request for Waiver for Optional Monthly Cash Investments and
Initial Investments in Excess of $10,000..............................10
12. When are dividends paid?..............................................13
13. When does the Plan Administrator purchase common shares?..............13
14. How does the Plan Administrator purchase the common shares?...........14
15. At what price will the Plan Administrator purchase the common
shares?...............................................................14
16. May I enroll, view my account information, and execute
transactions online?..................................................15
17. What kind of reports will I receive as a participant in the
Plan?.................................................................15
18. Will I receive share certificates for my Plan shares?.................16
19. Can I deposit share certificates for safekeeping?.....................16
20. How do I sell my Plan shares?.........................................17
21. How do I discontinue participation in the Plan?.......................17
22. What happens if I sell or transfer all the common shares
registered in my name and held by me?.................................18
23. What happens if we declare a dividend payable in common
shares or declares a stock split?.....................................18
24. How will my common shares held by the Plan Administrator be
voted at meetings of shareholders?....................................19
25. Limitation of Liability...............................................19
USE OF PROCEEDS..............................................................19
FEDERAL INCOME TAX CONSEQUENCES..............................................19
PLAN OF DISTRIBUTION.........................................................21
EXPERTS......................................................................22
LEGAL OPINIONS...............................................................22
RISK FACTORS
Before you decide to participate in the Plan and invest in our common
shares, you should be aware of the following material risks in making such an
investment. You should consider carefully this risk factor together with all
risk factors and information included or incorporated by reference in this
Prospectus before you decide to participate in the Plan and purchase common
shares. In addition, you should consult your own financial and legal advisors
before making an investment.
Risks Related to the Plan
You will not know the price of the common shares you are purchasing under the
Plan at the time you authorize the investment or elect to have your dividends
reinvested.
The price of our common shares may fluctuate between the time you decide to
purchase common shares under the Plan and the time of actual purchase. In
addition, during this time period, you may become aware of additional
information that might affect your investment decision.
Mellon Bank, N.A., or the Plan Administrator, administers the Plan. If you
instruct the Plan Administrator to sell common shares under the Plan, you will
not be able to direct the time or price at which your common shares are sold.
The price of our common shares may decline between the time you decide to sell
common shares and the time of actual sale.
If you decide to withdraw from the Plan, the Plan Administrator will
continue to hold your common shares unless you request a certificate for whole
shares.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain matters discussed herein may constitute forward-looking statements.
The Private Securities Litigation Reform Act of 1995 provides safe harbor
protections for forward-looking statements in order to encourage companies to
provide prospective information about their business. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance, and underlying assumptions and other statements, which
are other than statements of historical facts.
We desire to take advantage of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and is including this cautionary
statement in connection with this safe harbor legislation. The words "believe,"
"anticipate," "intend," "estimate," "forecast," "project," "plan," "potential,"
"will," "may," "should," "expect," "pending" and similar expressions identify
forward-looking statements.
The forward-looking statements are based upon various assumptions, many of
which are based, in turn, upon further assumptions, including without
limitation, our management's examination of historical operating trends, data
contained in our records and other data available from third parties. Although
we believe that these assumptions were reasonable when made, because these
assumptions are inherently subject to significant uncertainties and
contingencies which are difficult or impossible to predict and are beyond our
control, we cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections. We undertake no obligation to update any
forward-looking statement, whether as a result of new information, future events
or otherwise.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, general market conditions, including
fluctuations in charter rates and vessel values, changes in demand in the tanker
market, as a result of changes in OPEC's petroleum production levels and world
wide oil consumption and storage, changes in our operating expenses, including
bunker prices, drydocking and insurance costs, the market for our vessels,
availability of financing and refinancing, changes in governmental rules and
regulations or actions taken by regulatory authorities, potential liability from
pending or future litigation, general domestic and international political
conditions, potential disruption of shipping routes due to accidents or
political events, vessels breakdowns and instances of off-hire and other
important factors described from time to time in the reports filed by us with
the Securities and Exchange Commission.
AVAILABLE INFORMATION
We file annual, periodic and other reports, proxy statements and other
information with the Securities and Exchange Commission, or the SEC. You may
read and copy any materials that we file with the SEC at the SEC's public
reference room at 100 Fifth Street, N.E., Room 1580 Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference room. The SEC maintains an Internet site that contains
reports, proxy, and information statements, and other information regarding
issuers that file electronically with the SEC. The address for the Internet site
is: http://www.sec.gov.
You can also inspect our reports, proxy statements, and other information
about us at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be a part of this Prospectus, and information that we file later
with the SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below and the documents
that we file in the future with the SEC under Sections 13(a), 13(c), 14 or 15(d)
the Securities Exchange Act until the termination of this offering. Nothing
contained herein shall be deemed to incorporate by reference documents that we
furnish to, but do not file with, the SEC unless such documents state that they
are incorporated by reference into this Prospectus.
o The "Description of Capital Stock" filed with the SEC as Exhibit 99.1
on our Report of Foreign Private Issuer on Form 6-K on February 15,
2005;
o Our Prospectus Supplement filed with the SEC under Rule 424(b)(2) on
March 3, 2005 (Registration No. 333-118128);
o Our Annual Report on Form 20-F for the fiscal year ended December 31,
2004, filed with the SEC on June 30, 2005;
o Our Reports of Foreign Private Issuer on Form 6-K furnished to the SEC
on February 15, 2005, March 17, 2005, June 16, 2005 (both) and
October 14, 2005;
o Any future annual reports filed on Form 20-F; and
o Any future filing we make with the SEC that states it is incorporated
by reference into this Regristration Statement and this Prospectus.
You may request a free copy of the above mentioned filings or any
subsequent filing we incorporate by reference to this Prospectus by writing or
telephoning us at the following address:
Nordic American Tanker Shipping Limited
Reid House
31 Church Street
Hamilton FX
Bermuda
(441) 292-7202
THE COMPANY
We were founded on June 12, 1995 under the laws of the Islands of Bermuda
and maintain our principal offices at Reid House, 31 Church Street, Hamilton HM
12, Bermuda. Our telephone number at such address is (441) 292 7202.
We were formed for the purpose of acquiring and chartering three Suezmax
tankers that were built in 1997. These three vessels were bareboat chartered to
BP Shipping Ltd., or BP Shipping, for a period of seven years. BP Shipping
redelivered these three vessels to us in September 2004, October 2004 and
November 2004, respectively. We have continued contracts with BP Shipping by
time chartering to it two of our original vessels at spot market related rates
for three-year terms up to the autumn of 2007. We have bareboat chartered the
third of our original three vessels to Gulf Navigation Company LLC, or Gulf
Navigation, of Dubai, U.A.E. for a term of five years at a fixed rate of
charterhire, subject to two one-year extensions at Gulf Navigation's option. In
November 2004, we acquired our fourth vessel, and acquired our fifth and sixth
vessels in March 2005. We acquired our seventh vessel, a 1998 built double-hull
Suezmax tanker, in August 2005. We acquired our eighth vessel, a 1998 built
double-hull Suezmax tanker, in November 2005. We are currently operating these
vessels in the spot market.
DESCRIPTION OF THE PLAN
1. What is the Plan?
Our Dividend Reinvestment and Direct Stock Purchase Plan, or the Plan,
enables new investors to make an initial investment in our common shares and
existing investors to increase their holdings of our common shares. Participants
can purchase our common shares with optional monthly cash investments and cash
dividends.
The Plan is designed for long-term investors who wish to invest and build
their share ownership over time. The Plan is not intended to provide holders of
common shares with a mechanism for generating assured short-term profits through
rapid turnover of shares acquired at a discount. The Plan's intended purpose
precludes any person, organization or other entity from establishing a series of
related accounts for the purpose of conducting arbitrage operations and/or
exceeding the optional monthly cash investment limit.
We reserve the right to modify, suspend or terminate participation by a
shareholder who is using the Plan for purposes inconsistent with its intended
purpose.
2. What features does the Plan offer?
Initial investment. If you are not an existing shareholder, you can make an
initial investment in our common shares, starting with as little as $250 and up
to a maximum of $10,000. See "7. How do I enroll if I am not currently a
shareholder?" below for more information.
Optional monthly cash investments. Once you are enrolled in the Plan, you
can buy our common shares and pay fees and commissions lower than those
typically charged by stockbrokers for small transactions. You can increase your
holdings of our common shares through optional monthly cash investments of $50
or more, up to a maximum of $10,000 per month. You can make optional monthly
cash investments by check, money order or electronically with deductions from
your personal bank account -- either in a single transaction or automatically
each month. If you wish to make optional monthly cash investments in excess of
$10,000 in any month or an initial investment in excess of $10,000, see "9. What
are my options for additional cash investments once I am enrolled in the Plan?"
below for more information.
Automatic dividend reinvestment. You can also increase your holdings of our
common shares through automatic reinvestment of your cash dividends. You will
also be credited with dividends on fractions of common shares you hold in the
Plan. You can elect to reinvest all or a portion of your dividends. You can
receive, electronically or by check, any portion of dividends not reinvested by
you. See "5. How do I enroll in the Plan if I am an existing shareholder and my
common shares are registered in my own name?" and "10. What are my reinvestment
options?" below for more information.
Share safekeeping. You can deposit your share certificate representing
common shares for safekeeping with the Plan Administrator. See "19. Can I
deposit share certificates for safekeeping?" below for more information.
Automated transactions. You can execute many of your Plan transactions
on-line. See "16. May I enroll, view my account information, and execute
transactions online?" below for more information.
Refer to "8. What are the fees associated with participation?" below for
details on fees charged for these transactions and services.
3. Who is the Plan Administrator and what does the Plan Administrator do?
Mellon Bank, N.A., currently is the Plan Administrator. The Plan
Administrator with certain administrative support provided by Mellon Investor
Services LLC, a registered transfer agent, and Mellon Securities LLC, a
registered broker/ dealer, as designated agent for each participating
shareholder, administers the Plan, keeps records, sends statements of account
activity to each participant and performs other duties relating to the Plan. The
Plan Administrator holds for safekeeping the common shares purchased for you
together with common shares forwarded by you to the Plan Administrator for
safekeeping until termination of your participation in the Plan or receipt of
your request for a certificate for all or part of your common shares. Common
shares purchased under the Plan and held by the Plan Administrator will be
registered in the Plan Administrator's name or the name of its nominee, as your
agent. In the event that the Plan Administrator should resign or otherwise cease
to act as agent, we will appoint a new administrator to administer the Plan.
The Plan Administrator also acts as dividend disbursing agent, transfer
agent and registrar for our common shares.
We and the Plan Administrator will not be liable in administering the Plan
for any act done in good faith or as required by applicable securities laws or
for any good faith omission to act including, without limitation, any claim or
liability arising out of failure to terminate your account upon your death, or
with respect to the prices at which common shares are purchased for your account
and the times when such purchases are made or with respect to any fluctuation in
the market value after purchase or sale of common shares. Neither we nor the
Plan Administrator shall have any duties, responsibilities or liabilities except
such as are expressly set forth in the Plan.
4. How do I contact the Plan Administrator?
If you have questions regarding the Plan, please write to the Plan
Administrator at the following address: Mellon Bank, N.A. c/o Mellon Investor
Services, P.O. Box 3338, South Hackensack, NJ 07606-1938, or call the Plan
Administrator at 1-800-635-5835 (if you are inside the United States or Canada),
1-201-680-6578 (if you are outside the United States or Canada) or
1-800-231-5469 for the hearing impaired (TDD). An automated voice response
system is available 24 hours a day, 7 days a week. Customer service
representatives are available from 9:00 a.m. to 7:00 p.m., Eastern Time, Monday
through Friday (except holidays).
In addition, you may visit the Mellon Investor Services website at
www.melloninvestor.com. At this website, you can enroll in the Plan, obtain
information, and perform certain transactions on your Plan account via Investor
ServiceDirect(R) at www.melloninvestor.com. To gain access, you will need a
password which you may establish when you visit the website. If you have
forgotten your password, call 1-877-978-7778 to have it reset.
Include your name, address, daytime telephone number, account number,
Social Security Number and reference Nordic American Tanker Shipping Limited on
all correspondence.
5. How do I enroll in the Plan if I am an existing shareholder and my common
shares are registered in my name?
If you already own our common shares and the common shares are registered
in your name, you may participate in the Plan immediately. You may participate
by choosing to reinvest all or part of your quarterly dividend, if any, or by
making an additional cash investment. Please see "9. What are my options for
additional cash investments once I am enrolled in the Plan?" below for details
regarding optional monthly cash investments and "10. What are my reinvestment
options?" below for details regarding the different reinvestment elections you
can make under the Plan. You can enroll online through Investor ServiceDirect(R)
at www.melloninvestor.com or by completing and returning the enclosed enrollment
form to the Plan Administrator in the envelope provided. Your participation will
begin promptly after your authorization is received. Once you have enrolled,
your participation continues automatically until either you elect to withdraw
from the Plan or the Plan is terminated by us.
If you need to obtain an enrollment form, contact the Plan Administrator at
1-800-635-5835. While there is no cost to enroll in the Plan, please refer to
"8. What are the fees associated with participation?" for more information on
purchase, reinvestment and sale fees, and other expenses.
6. My shares are held in "street name." How do I enroll in the Plan if I am an
existing shareholder and my common shares are registered in the name of my
broker, bank or other nominee?
If your common shares are registered in the name of a broker, bank or other
nominee, you should contact that institution and discuss with it whether it can
arrange for you to participate in the Plan. If the broker, bank or other nominee
cannot arrange for you to participate in the Plan, you should arrange for the
broker, bank or other nominee to register in your name the number of common
shares that you want to participate in the Plan or have the common shares
electronically transferred into your own name through the Direct Registration
System. You can then enroll in the Plan, as described in "5. How do I enroll in
the Plan if I am an existing shareholder and my common shares are registered in
my name?" above. Alternatively, if you do not want to re-register your common
shares, you can enroll in the Plan in the same way as someone who is not
currently a shareholder, as described in "7. How do I enroll if I am not
currently a shareholder?" below. However, even if you enroll in the Plan by
making an investment as described in "7. How do I enroll if I am not currently a
shareholder?", any existing common shares that are not registered in your name
will not be able to participate in the Plan.
7. How do I enroll if I am not currently a shareholder?
If you do not currently own any of our common shares (or you are an
existing shareholder that is not enrolled in the Plan and your common shares are
not registered in your name), you can participate by making an initial cash
investment through the Plan for as little as $250 and up to a maximum of
$10,000. Your initial investment can be made using one of the following options:
Via on-line enrollment through Investor
ServiceDirect(R) at www.melloninvestor.com and:
-----------------------------------------------
o authorizing one deduction (minimum of $250) from your bank account; or
o opening your account on-line and sending your initial investment of
$250 or more by check or money order payable to Nordic American Tanker
Shipping Limited/ Mellon Bank.
Via the Enrollment Form and:
----------------------------
o submitting it to the Plan Administrator, and making one payment
(minimum of $250) by check or money order payable to Nordic American
Tanker Shipping Limited/ Mellon Bank.
If you need to obtain an enrollment form, contact the Plan Administrator at
1-800-635-5835.
Please refer to "8. What are the fees associated with participation?" for
more information on enrollment, purchase, reinvestment and sale fees, and other
expenses.
8. What are the fees associated with participation?
We will pay all brokerage trading fees on common shares purchased through
the Plan when common shares are being acquired from us or through open market
sources.
You will not be charged an enrollment fee if you enroll in the Plan in the
manner described in "5. How do I enroll in the Plan if I am an existing
shareholder and my common shares are registered in my name?"
You will not be charged an enrollment fee if you enroll in the Plan by
having your broker, bank or other nominee make arrangements for you to
participate in the Plan as described in "6. My shares are held in "street name."
How do I enroll in the Plan if I am an existing shareholder and my common shares
are registered in the name of my broker, bank or other nominee?" However, you
will be responsible for any costs incurred in connection with such arrangement
and any fees charged by your broker, bank or other nominee.
You will be charged a $15.00 enrollment fee if you enroll in the Plan by
making an initial cash investment as described in "7. How do I enroll if I am
not currently a shareholder?"
Once enrolled in the Plan, you will be charged a $5.00 processing fee for
each optional additional cash investment made through the Plan by check or money
order as described in "9. What are my options for additional cash investments
once I am enrolled in the Plan."
If you choose to make any payments to the Plan electronically through your
bank account, you will be charged a $2.00 processing fee for each deduction made
from your bank account for optional additional cash investments. You will also
be responsible for any other costs your bank may charge in connection with
deductions from or payments made to your bank account.
If you request that your common shares that are subject to the Plan be
sold, you will receive the proceeds less a handling fee of $15.00, brokerage
trading fees ($0.12 per share as of the date of this Prospectus) and applicable
stock transfer taxes. If you choose to sell your common shares that are subject
to the Plan through a stockbroker of your choice, you will be responsible for
any fees or costs your broker may charge in connection with the transfer of your
common shares to such stockbroker and applicable stock transfer taxes. Please
see "20. How do I sell my Plan shares?" for information relating to the sale of
common shares that are subject to the Plan.
A $35 fee will be assessed for any check that is returned for insufficient
funds. We can change the fee structure of the Plan at any time. We will give you
notice of any fee changes prior to the changes becoming effective.
9. What are my options for additional cash investments once I am enrolled in
the Plan?
Once you are enrolled in the Plan, you may purchase additional common
shares through optional cash investments, regardless of whether dividends are
being reinvested. Optional cash investments may not be less than $50, and the
total of all optional cash investments submitted by an individual shareholder
may not exceed $10,000 in any month, unless a request for waiver has been
granted. The $50 minimum applies only to optional cash investments by existing
Plan participants. New investors or existing shareholders making an initial
investment in order to enroll in the Plan as described in "6. My shares are held
in "street name." How do I enroll in the Plan if I am an existing shareholder
and my common shares are registered in the name of my broker, bank or other
nominee?" and "7. How do I enroll if I am not currently a shareholder?" must
make an initial investment of not less than $250. There is no obligation either
to make an optional cash investment or to invest the same amount of cash for
each investment.
Check or Money Order. You may make optional monthly cash investments by
sending a check or money order to the Plan Administrator payable to Nordic
American Tanker Shipping Limited/ Mellon Bank. To facilitate processing of your
investment, please use the transaction stub attached to your Plan statement.
Mail your investment and transaction stub to the address specified on the stub.
A $35 fee will be assessed for a check that is returned for insufficient funds.
Please see "8. What are the fees associated with participation?" above for all
other applicable Plan fees.
One-Time and Automatic Monthly Withdrawals. If you already own common
shares and are enrolled in the Plan and want to make additional monthly
purchases, you can also authorize automatic monthly deductions from your bank
account by completing the appropriate section in the enclosed enrollment form,
or by enrolling online after you access your account through Investor
ServiceDirect(R) at www.melloninvestor.com. This feature enables you to make
ongoing investments in an amount that is comfortable for you, without having to
write a check. You can also a one-time individual automatic deduction from your
bank account through Investor ServiceDirect(R). The amounts you have authorized
will be withdrawn from your bank account on the 25th day of each month, or the
next succeeding business day if the 25th day falls on a weekend or holiday. You
will be responsible for all processing fees and any other costs your bank may
charge in connection with deductions from your bank account. Please see "8. What
are the fees associated with participation?" above for all applicable Plan fees.
Please see "21. How do I discontinue participation in the Plan?" for
information on discontinuing participation in the Plan.
10. What are my reinvestment options?
o If you elect "Full Dividend Reinvestment," you direct the Plan
Administrator to apply toward the purchase of additional common shares all
your cash dividends on all the common shares then or subsequently
registered in your name, together with any optional monthly cash
investments. Under this option, the Plan operates so as to reinvest
dividends on a cumulative basis until you instruct otherwise, you withdraw
from the Plan or the Plan is terminated.
o If you elect "Partial Dividend Reinvestment," you direct the Plan
Administrator to apply toward the purchase of additional common shares all
your cash dividends only on the number of common shares registered in your
name that you specify, together with any optional monthly cash investments.
o If you elect for "Optional Cash Investments Only," you will continue to
receive cash dividends on all of your common shares registered in your name
in the usual manner, but the Plan Administrator will apply any optional
monthly cash investment received to the purchase of additional common
shares under the Plan.
Also, you can further direct the Plan Administrator to:
o Reinvest automatically any dividends on common shares subsequently acquired
that are registered in your name and held in your Plan account.
o Automatically deposit into your Plan account any subsequent stock dividends
and/or stock splits on all common shares participating in the Plan.
You may change your investment options by contacting the Plan
Administrator. Please see "4. How do I contact the Plan Administrator?" for
contact details.
A shareholder whose common shares are registered in the name of a broker,
bank or other nominee must make arrangements to have the broker, bank or other
nominee register in the shareholder's name the number of common shares he or she
wants to participate in the Plan or have the common shares electronically
transferred into your own name through the Direct Registration System. Please
see "6. My shares are held in "street name". How do I enroll in the Plan if I am
an existing shareholder and my common shares are registered in the name of my
broker, bank or other nominee?" for more information.
11. Request for Waiver for Optional Monthly Cash Investments and Initial
Investments in Excess of $10,000
General
-------
If you want to make optional monthly cash investments in excess of $10,000
in any month or an initial investment in excess of $10,000, you must receive our
written approval. To obtain our written approval, you must submit a request for
waiver form. You can obtain a request for waiver form by contacting the Plan
Administrator's Waiver Department at (917) 320-6300 and upon completion, please
send it to the Plan Administrator's Waiver Department via facsimile at (917)
320-6312. We have the sole discretion to approve or refuse any request to make
an optional monthly cash investment or initial investment in excess of the
maximum amount and to set the terms of any such optional monthly cash investment
or initial investment.
If we approve your request for waiver, the Plan Administrator will notify
you promptly. In deciding whether to approve a request for waiver, we will
consider relevant factors, including, but not limited to, the following:
o whether the Plan is then acquiring newly issued common shares directly from
us or acquiring common shares in the open market or in privately negotiated
transactions from third parties;
o our need for additional funds;
o the attractiveness of obtaining additional funds through the sale of common
shares as compared to other sources of funds;
o the purchase price likely to apply to any sale of common shares;
o the shareholder submitting the request;
o the extent and nature of the shareholder's prior participation in the Plan;
o the number of common shares held of record by the shareholder; and
o the aggregate number of optional monthly cash investments and initial
investments in excess of $10,000 for which requests for waiver have been
submitted by all existing shareholders and new investors.
If requests for waiver are submitted for an aggregate amount in excess of
the amount we are then willing to accept, we may honor such requests in order of
receipt, pro rata or by any other method that we determine to be appropriate. We
may determine, in our discretion, the maximum amount that an existing
shareholder or new investor may invest pursuant to the Plan or the maximum
number of common shares that may be purchased pursuant to a request for waiver.
Purchases and Pricing of Common Shares
Purchased Pursuant to a Request for Waiver
------------------------------------------
If a request for waiver is approved, the price of common shares purchased
pursuant to the request for waiver will be determined using a pricing period of
not less than one (1) but not more than ten (10) trading days commencing on a
date set by us as the first day of the pricing period. Optional monthly cash
investments or initial investment made pursuant to a request for waiver will be
used to purchase common shares as soon as practicable on or after the business
day following the last day of the pricing period. This date is referred to as
the "Waiver Investment Date." The Plan Administrator will apply all good funds
received on or before the first business day before the pricing period to the
purchase common shares on the Waiver Investment Date. Funds received after the
pricing period begins will be returned to you. For more information, see "13.
When does the Plan Administrator purchase common shares?"
For purposes of determining the price per common share on the Waiver
Investment Date, the price will be equal to the average of the high and low
sales prices of our common shares, computed up to four decimal places, if
necessary, as quoted on the New York Stock Exchange, for the applicable trading
days immediately preceding the Waiver Investment Date. The purchase price on any
Waiver Investment Date may be reduced by the waiver discount, if any.
For any pricing period, we may establish a minimum purchase price per
common share, referred to as the threshold price, applicable to optional monthly
cash investments and initial investments made pursuant to a request for waiver.
At least three (3) business days prior to the first day of the applicable
pricing period, we will decide whether to establish a threshold price, and if
so, its amount. We will notify the Plan Administrator as to the amount of the
threshold price, if any. We will make this determination at our discretion after
a review of current market conditions, the level of participation in the Plan
and our need for additional funds.
If a threshold price is established for any pricing period, it will be
fixed as a dollar amount that the average of the high and low sales prices of
our common shares as quoted by the New York Stock Exchange for each trading day
during the applicable pricing period must equal or exceed (not adjusted for a
waiver discount, if any). In the event that the threshold price is not satisfied
for a trading day in the pricing period, then that trading day will be excluded
from the pricing period and all trading prices for that trading day will be
excluded from the determination of the purchase price. In addition, we will
exclude from the pricing period and from the determination of the purchase price
any trading day in which no trades of common shares are made on the New York
Stock Exchange. Thus, for example, for a five-day pricing period, if the
threshold price is not satisfied or no trades of our common shares are reported
for one of the five trading days in the pricing period, then the purchase price
will be based on the remaining four trading days in which the threshold price is
satisfied.
In addition, a portion of each optional monthly cash investment or initial
investment made pursuant to a request for waiver will be returned for each
trading day of a pricing period in which the threshold price is not satisfied or
for each trading day in which no trades of our common shares are reported on the
New York Stock Exchange. The amount returned will be equal to a pro rata portion
of the amount of the optional monthly cash investment or initial investment (not
just the amount in excess of $10,000) for each trading day that the threshold
price is not satisfied or in which no trades of our common shares are reported.
For example, for a five-day pricing period, if the threshold price is not
satisfied or no trades of our common shares are reported for one of the five
trading days in the pricing period, then 1/5 (or 20%) of the optional monthly
cash investment or initial investment will be returned without interest.
The establishment of the threshold price and the possible return of a
portion of an optional monthly cash investment or initial investment applies
only to optional monthly cash investments and initial investments made pursuant
to a request for waiver. Setting a threshold price for a pricing period will not
affect the setting of a threshold price for a subsequent pricing period. We may
waive our right to set a threshold price for any pricing period. Neither we nor
the Plan Administrator is required to provide you with any written notice as to
the threshold price for any pricing period. You may contact the Plan
Administrator's Waiver Department at (917) 320-6300 to find out if a threshold
price has been fixed or waived for any given pricing period.
For each pricing period, we may establish a discount from the market price
applicable to optional monthly cash investments and initial investments made
pursuant to a request for waiver. This waiver discount, if any, will range from
0% to 5% of the purchase price and may vary for each pricing period. The waiver
discount, if any, will be established at our sole discretion after a review of
current market conditions, the level of participation in the Plan, the
attractiveness of obtaining additional funds through the sale of our common
shares as compared to other sources of funds and our need for additional funds.
You may obtain information regarding the maximum waiver discount, if any, by
contacting the Plan Administrator's Waiver Department at (917) 320-6300. Setting
a waiver discount for a particular pricing period will not affect the setting of
a waiver discount for any subsequent pricing period. The waiver discount will
apply to the entire optional monthly cash investment or initial investment made
pursuant to a waiver and not just the portion in excess of $10,000. The
discount, if any, will not apply to reinvested dividends, or initial investments
or optional monthly cash investments that are not made pursuant to a request for
waiver.
We will only establish a threshold price or waiver discount for common
shares that are purchased directly from us.
12. When are dividends paid?
Our policy is to declare quarterly dividends to shareholders each January,
April, July and October. We may, in our discretion, defer to a later date if
necessary or advisable under applicable securities laws our sale to the Plan
Administrator of common shares to be purchased with reinvested dividends.
Only shareholders who own our common shares as of the record date for any
declared dividend will be entitled to receive the dividend payment. Record dates
for the payment of dividends will normally precede the payment dates by
approximately ten (10) to twenty (20) business days.
In the unlikely event that, due to unusual market conditions, the Plan
Administrator is unable to invest the dividends within 30 days, the Plan
Administrator will remit the dividends to you by check.
The payment of dividends on our common shares is at the discretion of our
board of directors. There is no guarantee that we will pay dividends in the
future. Please see the documents incorporated into this Prospectus for a more
detailed discussion of our dividend policy and the risks relating to dividends.
13. When does the Plan Administrator purchase common shares?
Initial and Additional Cash Investments. Upon receipt of funds in an amount
equal to or less than $10,000, the Plan Administrator will invest initial and
additional cash investments once every month on the 30th day of the month, or
the next succeeding business day if the 30th day falls on a weekend or holiday.
For months when a dividend is payable, the investment date of the dividend will
be the dividend payment date for the quarter. Common shares will be posted to
your account in whole and fractional shares immediately upon settlement, usually
within three business days. You will receive a confirmation of your transaction
by paper statement at the postal address you give us when you enroll in the
Plan. In the unlikely event that, due to unusual market conditions, the Plan
Administrator is unable to invest the non-waiver optional cash funds within 30
days, the Plan Administrator will return the funds to you by check. No interest
will be paid on funds held by the Plan Administrator pending investment. Please
see "9. What are my options for additional cash investments once I am enrolled
in the Plan?" for information on automatic monthly withdrawal.
Optional cash investments must be sent so that the Plan Administrator
receives the payment at least one (1) business day prior to the investment date.
Funds received after the investment date will be held for investment on the next
investment date.
Optional monthly cash investments received by the Plan Administrator will
be returned to you upon your written request if such request is received by the
Plan Administrator no later than two (2) business days prior to the first day of
the Pricing Period. Please see "15. At what price will the Plan Administrator
purchase the common shares?" for information on the Pricing Period.
Dividend Reinvestment. If you enroll prior to the record date for a
dividend payment, your election to reinvest dividends will begin with that
dividend payment. If you enroll on or after any such record date, reinvestment
of dividends will begin on the dividend payment date following the next record
date if you are still a shareholder of record. Record dates for payment of
dividends will normally precede payment dates by ten (10) to twenty (20)
business days.
Common shares are purchased and sold for the Plan on specified dates or
during specified periods. As a result, you do not have any control over the
price at which common shares are purchased or sold for your account, and you may
pay a higher purchase price or receive a lower sales price then if you had
purchased or sold the common shares outside of the Plan. You bear the risk of
fluctuations in the price of our common shares. No interest is paid on funds
held by the Plan Administrator pending their investment. All optional monthly
cash investments, including the initial cash investment, are subject to
collection by the Plan Administrator of the full face value in U.S. funds.
14. How does the Plan Administrator purchase the common shares?
We may, in our sole discretion, instruct the Plan Administrator to purchase
all or a portion of the common shares in connection with the distribution of
common shares purchased pursuant to reinvestment of dividends or any initial or
optional monthly cash investment directly from us at the "Current Market Price"
(as defined below under "15. At what price will the Plan Administrator purchase
the common shares?").
If we do not instruct the Plan Administrator to purchase common shares
directly from us, the Plan Administrator may purchase common shares in the open
market or in negotiated transactions, and may be subject to such terms with
respect to price, delivery and other terms as agreed to by the Plan
Administrator. In connection with purchases in the open market or in negotiated
transactions, neither we nor any Plan participant shall have any authorization
or power to direct the time or price at which common shares may be so purchased,
or the selection of the broker or dealer through or from whom purchases are to
be made.
Common shares will be allocated and credited to participants' accounts as
follows: (1) common shares purchased from us will be allocated and credited on
the appropriate investment date; and (2) common shares purchased in market
transactions will be allocated and credited as of the date on which the Plan
Administrator completes the purchases of the aggregate number of common shares
to be purchased. Depending on our election, participants may be credited with
common shares purchased from us, common shares purchased in market transactions
or a combination of both.
The method used by the Plan Administrator will impact the price at which
your common shares are purchased (see "15. At what price will the Plan
Administrator purchase the common shares?").
The amount of common shares to be purchased for your account depends on the
amount of your dividend and/or initial or optional monthly cash investment and
the purchase price of the common shares. Your account will be credited with that
number of common shares, including fractions computed to four decimal places,
equal to the amount you invest divided by the purchase price per common share.
You will be credited for dividends on fractions of shares.
15. At what price will the Plan Administrator purchase the common shares?
If we direct the Plan Administrator to purchase common shares directly from
us, the "Current Market Price" is defined as the average of the mean of the
daily high and low sales prices of the common shares as reported on the New York
Stock Exchange for the three (3) trading days immediately preceding the
investment date, or, if no trading occurs in the common shares on one or more of
such trading days, for the three (3) trading days immediately preceding the
investment date during which the common shares were traded in the New York Stock
Exchange, or the Pricing Period. If the Plan Administrator purchases common
shares in market transactions, the "Current Market Price" is defined as the
weighted average of the actual price paid for common shares purchased by the
Plan Administrator.
The purchase price of common shares purchased with reinvested dividends
will be the Current Market Price (as described above) less the dividend
reinvestment discount, if any, then in effect. The purchase price of common
shares purchased with initial or optional cash investments (excluding
investments in excess of $10,000 pursuant to a waiver) will be the Current
Market Price (as described above) less the optional or initial cash payment
discount, if any, then in effect.
We, in our sole discretion, may change or eliminate the dividend
reinvestment discount or the optional or initial cash investment discount, if
any, upon sending Plan participants not less than thirty (30) days' prior
written notice of such change or elimination. As of the date of this Prospectus,
there is no optional or initial cash payment discount.
If you request a waiver and we approve it, your initial investment may
exceed $10,000. For a description of the purchase price of common shares
pursuant to an approved waiver, see "Purchases and Pricing of Common Shares
Purchased Pursuant to a Request for Waiver" under "11. Request for Waiver for
Optional Monthly Cash Investments and Initial Investments in Excess of $10,000."
16. May I enroll, view my account information, and execute transactions online?
Investor ServiceDirect(R) is a Web-enabled real-time service, available 24
hours a day, 7 days a week. This service provides shareholders of record with
the ability to:
o enroll in the Plan;
o make initial or optional cash investments;
o request sale of common shares;
o obtain stock power forms;
o view account status and account transactions;
o perform address changes;
o request share certificates;
o request duplicate statements;
o view-print-request form 1099; and
o view certificate, book-entry and dividend payment history.
Technical assistance and help if you have forgotten your password are
available Monday through Friday, between 9:00 a.m. and 7:00 p.m., Eastern
Standard Time, at (877) 978-7778.
To access Investor ServiceDirect(R), please visit the Mellon Investor
Services website at www.melloninvestor.com.
17. What kind of reports will I receive as a participant in the Plan?
Unless you participate in the Plan through a broker, bank or nominee, the
Plan Administrator will send a transaction notice confirming the details of any
initial and optional cash investment you make within three (3) business days.
When you participate in the dividend reinvestment feature, you will receive a
quarterly statement of your account. If you do not reinvest dividends and have
no additional purchase or sale transactions, you will receive an annual
statement detailing the status of your holdings of common shares in your Plan
account.
The Plan Administrator will send a statement following any sale activity in
your account. In this statement you will receive a check and a statement with
information regarding the trade such as sale price, shares sold, net dollars and
taxes, if any.
You should keep these statements as they contain important information
regarding the tax basis for common shares purchased pursuant to the Plan and the
gain for common shares sold.
You can request copies of statements by contacting the Plan Administrator
via an online request or by telephone. In addition, you will receive copies of
other communications sent to holders of common shares, including our annual and
other reports to our shareholders, the notice of annual meeting and proxy
statement in connection with our annual meeting of shareholders and Internal
Revenue Service information for reporting dividends paid.
You can also access your Plan account statement through Mellon Investor
Services' on-line program, MLinksm. Convenient and easy on-line access to your
shareholder communications is only a click away. Besides your Plan account
statements, you may access your 1099 tax documents, notification of ACH
transmissions, transaction advices, annual meeting materials and selected
correspondence on-line.
Enrollment is simple and quick. Logon to Investor ServiceDirect(R) to enjoy
the many benefits MLinksm offers, including:
o Faster delivery of important documents
o Electronic notification of account activity via email
o Secure access to your mailbox 24 hours a day, 7 days a week
o Convenience of managing your documents - view, print, download
Please visit www.melloninvestor.com/ISD for more information.
18. Will I receive share certificates for my Plan shares?
Each purchase of common shares through the Plan is credited to your Plan
account. Your account statement will show the number of common shares, including
any fractional share, credited to your account. You will not receive a
certificate for your Plan shares unless you request one. You can request a
certificate for some or all of your whole shares from the Plan Administrator at
any time. Certificates for fractional shares are never issued.
Your account under the Plan will be maintained in the name or names in
which your certificates were registered at the time you entered the Plan.
Consequently, certificates for whole shares will be similarly registered when
issued.
19. Can I deposit share certificates for safekeeping?
You can at any time, including when you first enroll, deposit share
certificates registered in your name with the Plan Administrator for
safekeeping, at no cost to you.
Safekeeping protects your share certificates against loss, theft or
accidental destruction and also provides a convenient way for you to keep track
of your common shares. Only share certificates held in safekeeping may be sold
through the Plan.
If you own common shares in certificate form, you may deposit your
certificates for those shares free of charge with the Plan Administrator. The
Plan Administrator will provide mail loss insurance coverage for certificates
with a value not exceeding $100,000 in any one shipping package that you mail to
its address at Newport Office Center VII, 480 Washington Blvd., Jersey City, NJ
07310 by USPS registered mail or by any of the following overnight couriers:
Airborne, DHL, Emery, ExpressMail, FedEx, Purolator, TNT and UPS.
Note: Mail loss insurance covers only the replacement of share certificates
and in no way protects any loss resulting from fluctuations in the value the
common shares represented by such certificate.
20. How do I sell my Plan shares?
You can sell some or all of your Plan shares by submitting the appropriate
information on the transaction stub of your Plan statement, by submitting a
written request to the Plan Administrator, or by phone. Please see "4. How do I
contact the Plan Administrator?" for contact details. You can also sell the Plan
shares on-line (see "16. May I enroll, view my account information, and execute
transactions online?"). Your sale request will be processed and your Plan shares
will, subject to market conditions and other factors, generally be sold within
24 hours of receipt of your request. Please note that the Plan Administrator
cannot and does not guarantee the actual sale date or price, nor can it stop or
cancel any outstanding request to sell shares or issue physical share
certificates. These requests are final. The Plan Administrator will mail a check
to you on the settlement date, which is three (3) business days after your Plan
shares have been sold in an amount equal to the proceeds of the sale less a
handling fee of $15.00, brokerage trading fees ($0.12 per share as of the date
of this Prospectus) and applicable stock transfer taxes.
Alternatively, you may choose to sell your Plan shares through a
stockbroker of your choice, in which case you would have to request that the
Plan Administrator electronically transfer your Plan shares to your stockbroker.
You will be responsible for a $15.00 handling fee, any other fees or expenses
incurred in connection with such transfer and applicable stock transfer taxes.
You may also request a certificate for your common shares from the Plan
Administrator for delivery to your stockbroker prior to settlement of such sale.
See "21. How do I discontinue participation in the Plan?" for instructions on
how to obtain a certificate.
The price of common shares fluctuates on a daily basis. The price may rise
or fall after you submit your request to sell and prior to the ultimate sale of
your common shares. The price risk will be borne solely by you. You cannot
revoke your request to the Plan Administrator to sell any Plan shares once it is
made.
21. How do I discontinue participation in the Plan?
You may discontinue the reinvestment of your dividends by giving notice to
the Plan Administrator by telephone, in writing or by changing your dividend
election under the "Manage Account Info" section when you access your account
over the Internet through Investor ServiceDirect(R) at www.melloninvestor.com.
Please see "4. How do I contact the Plan Administrator?" and "16. May I enroll,
view my account information, and execute transactions online?" for contact
details. If you discontinue your participation in the Plan, the Plan
Administrator will continue to hold your common shares unless you request a
certificate for any full shares and a check for any fractional share. In the
alternative, you may request that all or part of the common shares credited to
your account in the Plan be sold at any time. Please see "20. How do I sell my
Plan shares?" for more information.
If your request to discontinue participation in the Plan is received by the
Plan Administrator on or after a dividend record date but before the payment
date (record dates normally precede the payment dates by ten (10) to twenty (20)
business days), the Plan Administrator, in its sole discretion may either pay
such dividend in cash or reinvest it in common shares for your account. The
request to discontinue participation in the Plan will then be processed as
promptly as possible following such dividend payment date. Any cash payments
which you may have sent to the Plan Administrator prior to the request to
discontinue participation in the Plan will also be invested on the next
investment date unless you expressly request return of that payment in your
request to discontinue participation in the Plan and your request to discontinue
participation in the Plan is received by the Plan Administrator at least two (2)
business days prior to the investment date. All dividends subsequent to such
dividend payment date will be paid in cash to you unless and until you re-enroll
in the Plan, which you may do at any time.
If you have discontinued participation in the Plan, you can re-enroll in
the Plan on-line or by submitting a new enrollment form and complying with all
other enrollment procedures. To minimize unnecessary Plan administrative costs
and to encourage use of the Plan as a long-term investment vehicle, we reserve
the right to deny participation in the Plan to previous participants who we or
the Plan Administrator believe have been excessive in their enrollment and
discontinuation.
22. What happens if I sell or transfer all the common shares registered in my
name and held by me?
If you dispose of all the common shares registered in your name, including
the common shares participating in the Plan, but do not give notice to the Plan
Administrator, the Plan Administrator will continue to reinvest the cash
dividends on any common shares held in your account under the Plan until the
Plan Administrator is otherwise notified.
23. What happens if we declare a dividend payable in common shares or declares
a stock split?
Any shares we distribute as a dividend on common shares (including
fractional shares) credited to your account under the Plan, or upon any split of
such shares, will be credited to your account. Share dividends or splits
distributed on all other shares held by you and registered in your own name will
be mailed directly to you. In a rights offering, your entitlement will be based
upon your total holdings, including those credited to your account under the
Plan. Rights applicable to shares credited to your account under the Plan will
be sold by the Plan Administrator and the proceeds will be credited to your
account under the Plan and applied to the purchase of shares on the next
investment date.
If you want to exercise, transfer or sell any portion of the rights
applicable to the common shares credited to your account under the Plan, you
must request, at least two days prior to the record date for the issuance of any
such rights, that a portion of the shares credited to your account be
transferred from your account and registered in your name. Except in unusual
circumstances, the record date will be approximately ten (10) to twenty (20)
business days in advance of the applicable distribution date.
24. How will my common shares held by the Plan Administrator be voted at
meetings of shareholders?
Common shares held by the Plan Administrator for you will be voted as you
direct. A proxy card will be sent to you in connection with any annual or
special meeting of shareholders, as in the case of shareholders not
participating in the Plan. This card will cover all common shares registered in
your own name not participating in the Plan as well as all full and fractional
shares held by the Plan Administrator for your account or held by the Plan
Administrator for safekeeping under the Plan.
As in the case of nonparticipating shareholders, if on a properly signed
and returned proxy card, no instructions are indicated by you, all of your
common shares -- those registered in your own name and those held by the Plan
Administrator for your account under the Plan -- will be voted in accordance
with recommendations of our management, unless otherwise provided. If the proxy
card is not returned, or if it is returned unsigned or improperly signed, none
of the common shares covered by such proxy card (including those held by the
Plan Administrator under the Plan) will be voted.
25. Limitation of Liability
The Plan provides that neither we nor the Plan Administrator, nor any agent
will be liable in administering the Plan for any act done in good faith or any
omission to act in good faith in connection with the Plan. This limitation
includes, but is not limited to, any claims of liability relating to:
o the failure to terminate your Plan account upon your death or adjudicated
incompetence prior to receiving written notice of your death or adjudicated
incompetence; or
o the purchase or sale prices reflected in your Plan account or the dates of
purchases or sales of common shares under the Plan; or
o any loss or fluctuation in the market value of our common shares after the
purchase or sale of common shares under the Plan.
The foregoing limitation of liability does not represent a waiver of any
rights you may have under applicable securities laws.
USE OF PROCEEDS
The net proceeds we realize from sales of our authorized and unissued
common shares pursuant to the Plan will be used for working capital and general
corporate purposes. We do not know either the number of common shares that will
be purchased under the Plan or the prices at which the common shares will be
sold to participants.
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material United States federal income
tax considerations relevant to a U.S. Participant, as defined below, with
respect to participation in the Plan. This discussion does not purport to deal
with the tax consequences of participation in the Plan to all categories of
investors, some of which may be subject to special rules. You are encouraged to
consult your own tax advisors concerning the overall tax consequences arising in
your own particular situation under United States federal, state, local or
foreign law of the ownership of common stock.
The following discussion of United States federal income tax matters is
based on the United States Internal Revenue Code of 1986, or the Code, judicial
decisions, administrative pronouncements, and existing and proposed regulations
issued by the United States Department of the Treasury, all of which are subject
to change, possibly with retroactive effect. We have not received nor do we
intend to seek a private letter ruling from the Internal Revenue Service
regarding the Plan.
A "U.S. Participant" means a participant in the Plan that is a United
States citizen or resident, United States corporation or other United States
entity taxable as a corporation, an estate the income of which is subject to
United States federal income taxation regardless of its source, or a trust if a
court within the United States is able to exercise primary jurisdiction over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
If a partnership is a participant in the Plan, the tax treatment of a
partner will generally depend upon the status of the partner and upon the
activities of the partnership. If you are a partner in a partnership
participating in the Plan, you are encouraged to consult your tax advisor.
Tax Consequences Of Dividend Reinvestment
-----------------------------------------
In the case of newly-issued shares acquired from the us, a U.S. Participant
will be treated as receiving a dividend for United States federal income tax
purposes in an amount equal to the fair market value as of the dividend payment
date of the common shares purchased with the reinvested dividends. In the case
of common shares acquired in market transactions, a U.S. Participant will be
treated as receiving a dividend for United States federal income tax purposes in
an amount equal to sum of (x) the cash dividend paid by us and (y) the pro rata
share of any brokerage trading fees or other related charges paid by us in
connection with the Administrator's purchase of the common shares on behalf of
the participant. Those dividend amounts will be the U.S. Participant's basis in
the shares purchased. A U.S. Participant's holding period of those shares will
begin on the day following the date of purchase.
The dividends described above will constitute taxable dividend income to
U.S. Participant to the extent of our current and accumulated earnings and
profits allocable to the distributions. Such dividends may be eligible for
taxation at reduced rates in the hands of a non-corporate U.S. Participant,
provided that holding period and certain other requirements are satisfied.
Distributions in excess of our earnings and profits will be treated first as a
nontaxable return of capital to the extent of the U.S. Participant's tax basis
in his common shares on a dollar-for-dollar basis and thereafter as capital
gain.
Tax Consequences Of Optional Cash Investments
---------------------------------------------
With respect to newly issued shares, a U.S. Participant who elects to
invest in additional shares by making optional cash investments will be treated
for United States federal income tax purposes as having received a dividend
equal to the excess (if any) of (i) the fair market value on the investment date
of the shares purchased, over (ii) the optional cash investments made. A U.S.
Participant will not be deemed to have received a dividend with respect to
shares acquired by purchases in market transactions, except to the extent of
brokerage fees and charges paid to the Administrator by us. A U.S. Participant's
tax basis in the shares purchased will be equal to the cost paid by the
participant in acquiring the stock, plus the amount (if any) treated as a
dividend for federal income tax purposes. The U.S. Participant's holding period
for those shares will begin on the day following the date of purchase.
Shares, or any fraction of shares, purchased with initial or supplemental
cash payments will have a tax basis equal to the amount of the payments
increased by the amount of brokerage fees, if any, treated as a taxable dividend
to a U.S. Participant with respect to those shares or fraction of shares. The
holding period for the shares, or fraction of shares, begins on the day
following the purchase date.
Any distributions which the participant is treated as receiving would be
taxable income or gain or reduce the basis in common shares, or some combination
of these treatments, under the rules described above under "Tax Consequences of
Dividend Reinvestment."
Tax Consequences Of Dispositions
--------------------------------
A U.S. Participant generally will recognize taxable gain or loss upon a
sale, exchange or other disposition of the shares whether the sale or exchange
is made at the U.S. Participant's request upon withdrawal from the Plan or takes
place after withdrawal from or termination of the Plan and, in the case of a
fractional share, when the participant receives a cash payment for a fraction of
a share credited to his or her account. The amount of gain or loss will equal
the difference between the amount realized by the U.S. Participant from such
sale, exchange or other disposition and the U.S. Holder's tax basis in the
shares. Such gain or loss will be treated as long-term capital gain or loss if
the U.S. Participant's holding period in the shares is greater than one year at
the time of the sale, exchange or other disposition. A U.S. Participant's
ability to deduct capital losses is subject to certain limitations.
A U.S. Participant will not realize any taxable income when he receives
certificates for whole shares credited to his account, either upon his request
for such certificates or upon withdrawal from or termination of the Plan.
Backup Withholding and Information Reporting
--------------------------------------------
In general, dividend payments and other taxable distributions made within
the United States to a U.S. Participant will be subject to information reporting
requirements. Such payments will also be subject to backup withholding tax when
paid to a non-corporate U.S. Participant who:
o fails to provide an accurate taxpayer identification number;
o is notified by the Internal Revenue Service that he has failed to report
all interest or dividends required to be shown on his federal income tax
returns; or
o in certain circumstances, fails to comply with applicable certification
requirements.
If a dividend is subject to backup withholding, backup withholding will
be withheld from the dividend before the dividend is reinvested under the Plan.
Backup withholding tax is not an additional tax. Rather, a U.S. Participant
generally may obtain a refund of any amounts withheld under backup withholding
rules that exceed his income tax liability by filing a refund claim with the
Internal Revenue Service.
PLAN OF DISTRIBUTION
Subject to the discussion below, we will distribute newly issued common
shares sold under the Plan. Mellon Securities LLC, a registered broker/dealer,
may assist in the identification of investors and provide other related
services, but will not be acting as an underwriter with respect to our common
shares sold under the Plan. You will pay no brokerage trading fees on common
shares purchased through the Plan when common shares are being acquired from us
or through open market sources. However, you may be responsible for other fees
and expenses, including a handling fee and brokerage trading fees upon the sale
of your common shares that are subject to the Plan. Please see "Description of
the Plan" under "8. What are the fees associated with participation." The common
shares are currently listed on the NYSE.
In connection with the administration of the Plan, we may be requested to
approve investments made pursuant to requests for waiver by or on behalf of
existing shareholders and new investors who may be engaged in the securities
business.
Persons who acquire our common shares through the Plan and resell them
shortly after acquiring them, including coverage of short positions, under
certain circumstances, may be participating in a distribution of securities that
would require compliance with Regulation M under the Securities Exchange Act of
1934, and may be considered to be underwriters within the meaning of the
Securities Act of 1933. We will not extend to any such person any rights or
privileges other than those to which he, she or it would be entitled as a
participant, nor will we enter into any agreement with any such person regarding
the resale or distribution by any such person of our common shares so purchased.
We may, however, accept optional cash investments and initial investments made
pursuant to requests for waiver by such persons.
From time to time, financial intermediaries, including brokers and dealers,
and other persons may engage in positioning transactions in order to benefit
from any waiver discounts applicable to optional cash investments and initial
investments made pursuant to requests for waiver under the Plan. Those
transactions may cause fluctuations in the trading volume of our common shares.
Financial intermediaries and such other persons who engage in positioning
transactions may be deemed to be underwriters. We have no arrangements or
understandings, formal or informal, with any person relating to the sale of our
common shares to be received under the Plan. We reserve the right to modify,
suspend or terminate participation in the Plan by otherwise eligible persons to
eliminate practices that are inconsistent with the purposes of the Plan.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
our Annual Report on Form 20-F have been audited by Deloitte Statsautoriserte
Revisorer AS, an independent registered public accounting firm, as stated in
their report, which is incorporated in this Prospectus by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the securities offered by this Prospectus will be passed
upon for us Mello, Jones & Martin with respect to matters of Bermuda law.